UC-NRLF 


III  III  I 

B    3    131    142 


MAR  15  1906 


iO  iBpr 


PROCEEDINGS 


OF  THE 


Interstate  Commerce  Law  CoiiYention 


HEI.r.   AT 


St.  Louis,  Missouri,  October  28th  and  29th,  1904. 


-1+ 


I  '■  i7] 


'^' 


WASHINGTON,  D.  C. 

JUDD   &   DETWEILER,    PRINTERS 

1904 


REPORT  OF  PROCEEDINGS 

OF 

The  Interstate  Commerce  Law  Convention 

Held  at  St.  Louis,  Missouri,  October  28  and  29,  1904. 


FIRST  SESSION. 


St.  Louis,  MissourL  October  28,  190^. 

Ill  response  to  the  call  of  the  Executive  Committee,  dele^jates 
from  the  constituent  associations  allied  with  the  Interstate  Com- 
mej'ce  Law  Convention  met  at  St.  Louis,  Missouri,  on  the  date 
above  written. 

The  Convention  was  called  to  order  at  10.15  o'clock  a.  m.  in 
the  "  Washington  Universit}^  Dormitor}^  Building,"  Louisiana 
Purchase  Exposition  grounds,  by  the  chairman  of  the  Executive 
Committee,  Mr.  E.  P.  Bacon,  of  Milwaukee,  Wisconsin. 

After  stating  the  call  for  the  Convention,  Mr.  Bacon  said 
that,  in  view  of  the  fact  that  frequent  reports  had  been  submitted 
to  the  constituent  bodies  by  the  i^xecutive  Committee  as  to 
progress  of  the  work,  it  would  not  be  necessary  at  this  time  to 
recite  the  details  of  action  which  had  been  taken  since  the  last 
Convention  in  ])romoting  the  legislation  sought.  He  urged  the 
necessity  for  prompt,  vigorous,  and  general  cooperation  on  the 
part  of  the  commercial  and  industrial  organizations  of  the 
countr\',  in  order  to  secure  the  ]>assage  in  the  approaching  ses- 
sion of  Congress  of  pending  legislation  amendatory  of  the  Inter- 
state Commerce  Law. 

In  speaking  of  the  enactment  of  the  so-called  "Elkins  bill  " 
by  the  Fifty-seventh  Congress,  Mr.  Bacon  said  : 

"  It  was  introduced  under  the  auspices  of  the  Senate  commit- 
tee, which  naturally  gave  it  great  prestige,  and  it  was  concluded 
by  the  representatives  of  our  committee,  who  were  at  Washing- 
ton on  this  matter,  to  secure  certain  amendments  to  that  bill,  if 
practicable,  and  if  it  could  be  made  satisfactory',  to  approve  it,  as 
a  substitute  of  the  Nelson-Corliss  bill.     This  was  accomplished ; 

(3) 


M84386 


such  amendments  as  were  proposed  by  our  committee  were 
acce[)ted,  and  the  measure  was  subsequent!}^  known  as  '  the 
revised  Ellcins  bill.'  That  bill  contained  one  section  in  relation 
to  the  prevention  of  discrimination  between  individuals  which 
was  an  exceedingly  valuable  provision,  and  which  was  subse- 
quently reported  by  the  Senate  committee  to  the  Senate,  bj 
itseU";  the  rest  of  the  bill  being  dropped,  and  that  [)ortion  of  the 
bill  was  enacted  and  is  now  known  as  '  the  Elkins  law.'  As  you 
are  probal)ly  aware,  it  has  proven  exceedingly  effectual  in  the 
prevention  of  individual  discrimination.  It  did  not  relate,  how- 
ever„t',)  discriminati()n:  between  localities  or  sections,  or  between 
different  deseri4)tic7ns 'of  traffic,  and  it  did  not  provide  any 
means  for  the  correcting  pf  a  rate  which  was  found,  after  inves- 
tigation,, :t9])o.'wrotig,'.  Those  provisions  were  all  omitted  from 
the  revised  Elkins'bill,  when  it  was  reported  to  the  Senate. 

"The  Cooper-Quarles  bill  is  the  remainder  of  the  'revised 
Elkins  bill,'  taking  that  portion  of  it  which  the  Senate  commitee 
rejected,  or  failed  to  report,  and  that  portion  includes  the  vital 
provision  which  it  is  sought  by  the  commercial  interests  of  the 
country  to  secure  the  enactment  of,  namely,  that  an}^  rate  found 
to  be  discriminative  or  unreasonable  by  the  Interstate  Commerce 
Commission,  upon  full  investigation,  shall  be  corrected  by  sub- 
stituting such  rate  as  the  Commission  may  determine;  and  that 
rate  is  to  be  immediately  o|)erative,  subject  to  review  by  the 
circuit  court,  and  if  confirmed  by  the  circuit  court,  it  remains 
in  force,  although  appeal  may  be  taken  to  the  Supreme  Court. 
The  Cooper-Quarles  bill  was  pushed  at  the  last  session  of  Con- 
gress to  the  utmost,  but  the  o[)position  to  it  in  the  House  Com- 
mittee on  Interstate  and  Foreign  Commerce,  to  which  it  was 
referred,  was  such  as  to  prevent  securing  its  report. 

"It  reached  a  stage,  however,  in  that  committee  where  it  was 
believetl  that,  at  the  opening  of  the  next  session  of  Congress,  its 
report  can  be  secured. 

"  I  will  state  that  there  are  three  other  bills  before  this  com- 
mittee for  a  similar  purpose,  all  varying  more  or  less  in  detail; 
one  having  been  introduced  by  John  Sharp  Williams,  the  leader 
of  tlie  Democratic  side  of  the  House;  one  by  Mr.  Adamson,  of 
Georgia,  who  is  a  member  of  the  Interstate  and  Foreign  Com- 
merce Committee,  and  one  by  William  R.  Hearst,  of  New  York. 
All  of  those  bills  correspond  very  largely  in  their  provisions, 
varying  somewhat  in  their  details,  and  the  question  will  come 
before  the  committee  as  to  which  of  those  bills  will  be  rej)orted, 
or  what  combination  shall  l)e  made  of  the  several  bills  to  pro- 
duce one  to  l)e  reported  to  the  House  for  its  action. 

"It  is  partly  for  the  purpose  of  securing  action  on  the  ]>art 
of  the  House  committee  that  this  Convention  has  been  called. 
The  action  of  that  committee  can  only  be  secured  by  pressure 
from  the  people  all  over  the  country.  Representatives  in  Con- 
gress from  the  respective  districts  throughout  the  country  must 


be  so  influenced  that  they  will  take  the  matter  up  iudivifhially 
with  the  members  of  that  coniniittee  and  insist  upon  the  re- 
porting of  some  bill  immediately  upon  the  reassembling  of  Con- 
gress ;  and  while  we  here  will  express  our  sentiments  as  a  Con- 
vention as  regards  the  legislation,  it  will  be  of  little  consequence 
unless  it  is  followed  up  by  every  one  of  the  delegates  upon  his 
return  home,  endeavoring  to  secure  the  influence  of  the  Repre- 
sentative in  Congress  from  his  district  to  bear  upon  the  mem- 
bers of  the  House  Committee  on  Interstate  and  Foreign  Com- 
merce to  secure  the  reporting  of  a  bill  at  the  earliest  possible 
moment  after  the  reassembling  of  Congress.'' 


The  election  of  a  President,  a  Vice-President,  and  a  Secretary 
of  the  Convention  was  declared  to  be  the  next  order  of  business, 
and  the  following  officers  were  unanimously  elected : 

President,  H.  D.  Loveland,  of  San  Francisco,  Cal. 
Vice-President,  R.  W.  Higbie,  of  New  York  city,  N.  Y. 
Secretary,  Frank  Barry,  of  Washington,  D.  C. 

President  Loveland  thereupon  assumed  the  presiding  officer's 
chair. 


Mr.  J.  A.  Troutman,  representing  the  Topeka,  Kansas,  Com- 
mercial Club,  offered  the  following  resolution: 

Resolved,  That  the  order  of  business  for  this  Convention  shall 
be  as  follows : 

Friday,  October  28,  1904. 

1.  Convention  called  to  order  by  Mr.  E.  P.  Bacon,  chairman 
Executive  Committee. 

2.  Election  of  officers. 

3.  Address  of  welcome  by  Mr.  Wernse,  presiKlent  St.  Louis 
Merchants'  Exchange. 

4.  Response  by  Mr.  H.  D,  Loveland,  of  California. 

5.  Greeting  Ex-Governor  D.  R.  Francis,  of  Missouri. 

6.  Address  b}-^  Hon.  J.  D.  Kernan,  of  New  York. 

7.  Address  by  Ex-Governor  William  Larrabee,  of  Iowa. 

8.  Address  by  Judge  S.  H.  Cowan,  of  Texas, 

9.  A|)pointment  of  committees. 

10.  Resolutions  received  and  referred  to  committees. 

Saturday,  Octobkh  29,  1904. 

11.  llei)orts  of  committees  and  action  thereupon. 

The  resolution  was  adopted. 


6 

Mr.  M.  S.  Blish,  of  Seymour,  Ind.,  representing  the  Winter 
Wheat  Millers'  League,  presented  the  following  resolution  : 

Resolved,  That  the  President  shall  appoint  a  Committee  on 
Credentials,  a  Committee  on  Rules,  a  Committee  on  Finance, 
and  a  Committee  on  Resolutions,  to  serve  during  this  Conven- 
tion. 

The  resolution  was  adopted. 


Judge  S.  H.  Cowan,  of  Ft.  Worth,  Texas,  representing  the 
Texas  Cattle  Raisers'  Association,  submitted  the  following  reso- 
lution : 

Resolved,  That  the  President  of  this  Convention  shall  appoint 
an  Executive  Committee  of  nine  members,  of  which  he  shall  be 
a  nieinl)er  ex  officio,  and  that  said  Executive  Committee  shall 
direct  the  affairs  of  this  organization  until  its  next  meeting. 
Further  be  it 

Resolved,  That  there  shall  be  appointed  a  representative  of 
said  Executive  Committee  for  each  State  and  Territory  having 
members  affiliated  with  this  organization,  whose  duty  it  shall 
be  to  cooperate  with  the  Executiv:e  Committee.  Such  repre- 
sentatives to  ))e  nominated,  so  far  as  practicable,  by  the  delegates 
from  the  several  States  present  at  this  Convention,  and  in  ab- 
sence of  such  selection,  to  be  nominated  and  appointed  b}'  the 
President. 

Resolved,  That  the  Executive  Committee  may  be  enlarged,  if 
deemed  advisable,  or  vacancies  filled  by  the  said  committee. 

The  resolution  was  adopted. 


The  President  announced  the  following  appointment  of  a 
Committee  on  Credentials: 

Chairman,  Mr.  N.  B.  Kelly,  Philadelphia,  Pa.,  representing 
the  Philadeli)hia  Trades  League. 

Mr.  L.  'I\  Jamme,  Chicago,  111.,  representing  tlie  American 
Shippers'  Association. 

Mr.  C.  \V.  Maher,  Fort  Dodge,  Iowa,  representing  the  Corn 
Belt  Meat  Producers'  Association. 

Mr.  W.  E.  Newill,  Atlanta,  Ga.,  representing  the  Southern 
Hardware  Jobbers'  Association. 

Mr.  J.  A.  Troutman,  Topeka,  Kans.,  representing  the  Topeka 
Commercial  Club. 


Mr.  G.  F.  Daniels,  Boston,  AFass.,  representing  the  New  Eng- 
land Shoe  and  Leather  Association. 

Mr.  G.  S.  Gardiner,  Laurel,  Miss.,  re[)resenting  the  Central 
Yellow  Pine  Association. 

Mr.  F.  C.  Crandall,  St.  Louis,  Mo.,  representing  the  Missouri 
T.  P.  A. 

Mr.  J.  T.  L3^tle,  Fort  Worth,  Texas,  representing  the  Texas 
Cattle  Raisers'  Association. 


Mr.  E.  P.  Bacon,  of  Milwaukee,  Wis.,  chairman  of  the  Exec- 
utive Committee,  under  suspension  of  the  rules,  then  suhmitted 
in  hehalf  of  the  retiring  Executive  Committee  the  following 
petition  to  the  United  States  Congress,  recommending  its  adop- 
tion at  the  proper  time. 

To  the  Congress  of  the  United  States  : 

The  undersigned  commercial,  mercantile,  manufacturing  and 
agricultural  organizations,  embracing  various  branches  of  trade 
and  industry  throughout  the  United  States,  dul}^  authorized 
delegates  from  which  assembled  in  Convention  in  the  city  of 
St.  Louis,  Mo.,  on  the  28th  day  of  October,  1904,  for  the  purpose 
of  urging  upon  Congress  the  si)eedy  enactment  of  sucli  legisla- 
tion as  will  afford  relief  from  unjust  discrimination  in  tariff 
rates  established  by  the  railway  ci)r|>orations  of  the  country, 
resulting  in  undue  preference  and  advantage  to  certain  localities 
and  sections  and  certain  descriptions  of  traffic,  and  consequent 
undue  prejudice  and  disadvantage  to  others;  and  will  also  pro- 
vide effectual  means  of  protection  to  the  public  from  the  impo- 
sition of  unreasonable  and  oppressive  charges  for  the  perform- 
ance of  public  service  in  the  transportation  of  passengers  and 
property  as  common  carriers  under  franchises  granted  by  the 
people  ;  all  of  which  is  in  violation  of  the  Act  to  Regulate  Com- 
merce, approved  Feln'uarv  4,  1887.  the  provisions  of  wliich,  as 
interpreted  by  the  Supren)e  Court  of  the  United  States,  have 
proved  ineffectual  to  prevent  such  violation  ; 

Do  hereby  respectfalUj  'petition  your  honorable  body  to  8))eedily 
enact  such  legislation  as  will  ensure  the  enforcement  of  the 
primary  requirement  of  the  aforesaid  act,  namely,  that 

"All  charges  for  any  service  rendered  or  to  be  rendered  in  the 
transportation  of  passengers  or  property,  or  in  connection  there- 
with, or  for  the  receiving,  delivering,  storage,  or  handling  of 
such  property,  shall  be  reasonable  and  just." 

And  your  petitioners  further  pray  that  this  legislation  be  given 
the  })recedence  over  other  pending  legislation  which  its  great 
public  importance  demands. 


8 

It  is  the  sense  of  this  Convention  that  the  Interstate  Com- 
merce Commission,  created  by  the  aforesaid  act  "to  execute 
and  enforce  the  provisions  of  the  act,"  should  be  invested  with 
authority,  upon  full  hearing  of  any  formal  complaint,  to  i)re- 
scribe  reasonable  and  equitable  rates  to  be  substituted  by  the 
carrier  in  ))lace  of  those  found  to  be  unreasonable  or  discrim- 
inative; the  order  of  the  Commission  in  such  case  to  become 
operative  upon  due  notice  to  the  carrier  and  so  continue  until 
set  aside  by  the  court  of  last  resort,  unless  upon  review  in  the 
circuit  court  of  the  United  States  it  is  found  that  such  order 
clearly  proceeds  upon  some  error  of  law. 

The  document  was  referred  to  the  Committee  on  Resolutions 
and  was  subsequently  adopted,  upon  the  favorable  report  of 
said  committee  (page  49). 


Mr.  C.  B.  Boothe,  of  Los  Angeles,  Cal.,  chairman  of  the  Exec- 
utive Committee  of  the  National  Irrigation  Congress,  was  intro- 
duced, and,  in  behalf  of  that  association  and  citizens  of  El  Paso, 
Texas,  extended  an  invitation  to  members  of  the  Convention  to 
attend  the  next  session  of  the  Irrigation  Congress,  at  El  Paso, 
November  15  to  18. 


As  Mr.  Wernse  and  Ex-Governor  Francis,  who  were  expected 
to  address  the  Convention,  as  provided  by  the  order  of  busi- 
ness, had  not  yet  appeared,  it  was  decided  to  proceed  under  sus- 
pension of  rules. 


Ex-Governor  William  Larrabee,  of  Iowa,  addressed  the  Con- 
vention as  follows : 

Address  of  Ex-Governor  Larrabee. 

Gentlemen  of  the  Interstate  Commerce  Law  Convention: 

Every  person  familiar  witli  tbe  history  of  the  Interstate  Com- 
merce Law,  and  the  decisions  of  the  courts  affecting  it,  realizes 
the  necessity  for  amending  it,  in  order  to  make  it  what  it  was 
originally  intended  to  be  and  what  all  well-informed  and  fair- 
minded  men  admit  it  should  be. 

At  the  time  of  the  enactment  of  the  law  in  1887  the  income 
of  the  railroads  was  more  tban  sufiticient  to  afford  reasonable 
remuneration  for  the  capital  actually  invested  in  building  them 
and  for  the  ex])ense  of  maintaining  and  operating  them,  but 


9 

from  that  year  to  the  ])resent  time  the  capitalization  has  been 
constantly  increasinir,  entirely  out  of  |)ro|>ortion  to  tlie  increased 
mileage,  and  while  the  cost  of  transportation  has  steadily  de- 
creased, the  rates  charged  have  been  steadil}^  increased. 

The  law  was  enacted  for  tlie  purpose  of  preventing  improper 
discriminations  and  unjust  charges  b}'  railroad  managers,  l)Ut 
at  the  present  time,  under  existing  conditions,  there  is  no  law 
upon  our  statute  books  by  which  discriminations  and  this  in- 
crease of  rates  can  be  prevented.  The  only  show  for  relief 
whatever  is  a  suit  in  court  that  in  all  ])robal)ility  would  take 
from  three  to  ten  years  to  bring  to  a  final  decision,  and  this 
afi'ords'uo  ]iractical  relief. 

In  1887  there  were  in  the  United  States  149,912  miles  of  rail- 
road, with  an  income  of  $940,150,702.  In  1903  the  mileage  had 
increased  to  201.457  miles,  and  the  income  had  increased  to 
81,890,150.679.  During  this  period,  while  the  mileaire  had  in- 
creased over  34  per  cent.,  the  income  had  increased  over  101  per 
cent. 

During  the  last  ten  years  the  mileage  has  increased  26,234 
miles,  or  over  14  per  cent.,  while  the  income  has  increased 
$684,878,656,  or  more  than  56  per  cent. 

The  railroad  manager  may  say  that  wages  and  material  have 
advanced  in  ])rice  and  the  expense  of  operating  railways  has 
increased,  and  therefore  this  statement  is  unfair,  because  it  only 
shows  gross  receipts,  but  when  we  look  at  the  facts  we  tind  that 
while  the  cost  of  labor  and  material  have  advanced  in  price,  they 
have  not  advanced  in  pro|)ortion  to  the  increased  income  of  the 
railroads.  Improvements  in  machinerj'  and  improved  economic 
methods  are  constantly  reducing  the  cost  of  transportation,  as 
is  shown  by  the  feet  that  the  expense  of  operation  of  tlie  rail- 
roads hist  year  was  onl}-  66.05  i)er  cent,  of  the  gross  receipts. 

This  "  transportation  tax  "  is  immense,  and  this  is  the  j)roper 
name  for  it,  for  the  railroads  are  highways  just  as  much  as  the 
common  roadways,  and  the  l)usiness  of  operating  them  is  a  public 
business.  This  transportation  tax  in  1893  amounted  to  $17  per 
capita,  while  last  year  the  average  per  capita  for  every  man, 
woman,  and  child  in  the  United  States  was  $23  31,  or  equivalent 
to  $116.55  for  each  family  of  five  persons.  This  shows  an  in- 
crease of  $6.31  per  capita,  or  over  37  percent,  during  the  ten 
years.  For  the  same  year  the  average  tax  for  the  support  of  tlie 
United  States  Government  was  only  $8.56  per  capita,  or  $42.80 
per  famil}'.  The  total  net  income  of  the  railroads  last  year, 
after  paying  all  operating  expenses,  was  $734,709,239.  The  total 
receipts  of  revenue  from  all  sources  of  the  United  States  (lovern- 
ment  were  $694,621,117.64,  or  $40,088,121.36  less  than  the  net 
income  of  the  railroads. 

Is  there  a  good  reason  for  this  constant  advance  of  rates? 
If  tliere  is,  no  one  should  object  to  it.  But  is  it  reasonalde  that 
this  transportation  tax  should  be  increased  from  year  to  year 
without  those  who  pay  it  having  any  voice  whatever  in  deter- 


10 

milliner  what  it  should  be?  Banks  are  restricted  as  to  the  rates 
of  interest  that  they  rna}^  charge.  Rates  of  toll  are  fixed  for 
l)ul>lic  ferries,  bridges,  and  turnpikes.  Postal  rates  are  fixed  by 
law  for  carrying  mail  matter,  including  merchandise.  When  it 
is  ctMisidered  that  this  tax  is  levied  upon  every  article  that  is 
produced  or  consumed  in  the  United  States  at  tlie  command  of 
perliaps  less  than  a  score  of  individuals,  who  are  self-appointed 
for  terms  without  any  limit  as  to  time  and  are  not  under  bonds, 
and  even  not  under  oath,  to  observe  the  laws  of  tlie  State  and 
nation,  and  tliat  this  tax  amounted,  last  year,  to  the  enormous 
sum  of  Sl.890,150,679.  or  nearly  three  times  the  total  amount  of 
revenue  received  by  tlie  United  States  Government  from  all 
sources  for  the  same  period  of  time,  and  when  we  consider  how 
thoroughly  other  public  charges  are  hedged  about  by  careful 
restrictions  and  limitations,  and  with  what  deliberation  the 
amount  to  be  collected  is  fixed,  after  thorough  public  discussion 
by  agents  of  the  people,  selected  !)}'•  them  to  serve  only  for  short 
periods,  and  that  those  who  collect'and  disburse  the  funds  are 
under  oath  and  bonds  for  the  faithful  performance  of  their 
duties,  is  it  not  astonishing  that  the  Congress  of  the  United 
States  should  permit  this  condition  of  things  to  exist?  Other 
tax  laws  of  tlie  United  States  are  not  changed,  even  in  the 
slightest  degree,  without  months  of  discussion  by  Congress,  and 
after  thorough  investigation  of  all  interests  likely  to  be  affected 
by  the  change;  but  this  great  transportation  tax  can  be  in- 
creased by  this  handful  of  men  between  two  days,  and  is  often 
so  done  without  any  consultation  with  those  who  are  compelled 
to  pay  it,  or  any  consideration  for  their  interests. 

Nowhere  else  in  the  civilized  world  are  a  i'ew  irresponsible 
persons  permitted  to  carry  on  a  large  public  business  like  this, 
or  vested  with  such  tremendous  powers  of  taxation  without 
severe  restrictions  being  placed  u})on  them. 

It  would  be  as  reasonable  to  turn  over  all  of  our  common 
roads  or  the  Post-Oflice  business  to  a  few  persons  to  oi)erate  them 
for  their  own  ])rofit,  as  it  is  to  give  them  supreme  control  of  the 
railroads,  for  they  are  onl}'  public  roads. 

The  people  of  the  United  States  know  that  a  great  evil  exists. 
The  maijnitude  of  the  evil  is  well  understood  by  you  gentlemen. 
The  great  organizations  that  you  re[)resent  are  incapable  of  ask- 
ing Congress  for  anything  that  would  wrong  or  injure  in  any 
way  any  legitimate  interests  of  this  countiy.  These  organiza- 
tions, representing  nearly  400  of  the  great  commercial  bodies  of 
this  country,  with  a  membership  of  over  300,000  active  business 
men,  have  met  here,  not  for  the  purjiose  of  serving  selfish  inter- 
ests of  their  own,  or  of  any  locality,  but  for  the  purpose  of  de- 
vising'measures  of  relief  for  these  national  abuses  of  power. 

Is  there  any  remedy  for  the  evil  ?  The  Congress  of  the  United 
States  has  supreme  control  of  Interstate  Commerce.  Congress- 
men can  afford  relief  or  not,  as  they  please.  They  should  be 
like  good  soldiers,  and  do  their  duty  regardless  of  personal  con- 


11 

siderations  ;  hut  they  are  human  and  they  do  not  cultivate  that 
unselfishness  and  fearlessness  that  is  th()rou<fhly  instilhnl  into 
the  life  of  the  sohlier.  Tliey  have  to  run  tlie  gauntlet  of  an 
election  at  siiort  intervals.  Here  tliey  find  two  forces  interested, 
one  active  and  one  passive.  A  full  consideration  of  the  situa- 
tion leads  one.  after  all,  to  have  a  little  compassion  for  the  weak 
or  cowardly  Congressman.  On  the  one  side  he  finds  the  great 
corporations,  active  and  alert,  looking  keenly  after  their  inter- 
ests, and  on  the  other  side  the  people,  honest,  confidimr,  and 
unsuspecting.  The  railroatls  of  the  country  are  controlled  by  a 
few  persons  and  are  thoroughly  organized.  They  can  easily 
agree  upon  measures  tending  to  increase  their  incomes.  They 
endeavor  continuously  to  control  Municipal,  State. and  National 
Governments.  They  have  their  agents,  attorneys  and  hench- 
men employed  in  every  county  ot  the  United  States.  This 
force  is  always  at  work.  It  is  like  the  force  of  gravity,  always 
active  and  the  pressure  kept  up  in  ;ill  directions.  They  make 
extravagant  contributions  to  campaign  funds,  if  necessary,  to 
protect  those  who  serve  them,  frequently  amounting  to  $10,000, 
815,000,  or  even  825.000  in  a  single  congressional  district,  and 
a  much  larger  sum  to  control  senatorial  elections.  Thev  make 
it  a  rule  to  elect  and  protect  their  political  friends  and  to  de- 
feat candidates  for  ]iublic  offices  who  will  not  be  subservient  to 
them.  They  give  tips  to  public  officers  in  various  waj^s.  The 
railroad  pass  and  other  devices  for  free  transportation  are  used 
liberally.  The}^  have  no  use  for  flie  judge  or  other  public  officer 
who  will  not  accept  their  ])ribes. 

There  are  honorable  railroad  managers  who  deplore  this  con- 
dition and  who  will  welcome  legislation  that  will  afford  relief. 
They  know  well  that  without  strict  governmental  control  it  is 
impossible  for  the  conscientious  manager  to  get  and  retain  the 
business  that  his  road  is  actually  entitled  to. 

On  the  other  hand,  the  great  mass  of  people  are  generally 
engrossed  in  their  jn-ivate  business,  and  give  but  little  attention 
to  the  work  carried  on  b}'  the  political  intriguers.  They  are 
honest  and  only  seek  to  secure  good  government,  and  they  do 
not  realize  but  what  all  others  have  the  same  objects  in  view. 
Their  instincts  and  motives  are  alwavs  right.  They  are  tolerant 
and  forl)earing,  and  not  until  abuses  grow  to  great  proportions 
do  they  realize  the  necessity  for  action  and  arouse  themselves 
to  a  united  effort  to  correct  them.  With  a  proper  force  to  or- 
ganize them,  a  remedy  for  this  great  abuse  is  simple.  liCt  the 
commercial  bodies  and  the  farmers'  organizations  take  proper 
steps  to  organize  the  voters  of  the  congressional  districts  and  the 
legislators  of  the  various  States,  and  give  notice  to  their  Senators 
and  Representatives  that  unless  they  give  proper  attention  to  the 
interests  of  their  constituents  their  services  will  no  longer  be 
wanted  in  Congress.  Defeat  the  candidate  who  is  servile  to 
corj)orations,  whetlier  he  is  a  Repul)lican  or  a  Democrat.    Accept 


12 

no  apologies  or  excuses.     If  this  is  done,  you  may  rest  assured 
the  Interstate  Commerce  Law  will  be  promptly  amended. 

The  members  of  tlie  Trans-Mi.ssissi|)pi  Contjress  stated  here  at 
their  convention  this  week  that  every  measure  whicli  the}'  have 
asked  of  Congress  has  been  adopted.  I  ho[)e  that  the  organiza- 
tions east  of  the  great  Father  of  Waters,  joining  with  those  west 
of  it,  will  not  weaken  their  influence  with  Congress. 

As  an  aid  to  secure  honest  and  proper  legislation  upon  this 
subject,  this  Convention  should  demand  of  Congress  a  law  pro- 
hil)iting  the  bribery  of  pulilic  officials  by  use  of  the  telegra]ih 
and  express  franking  privilege,  the  railroad  pass,  and  other  kin- 
dred methods  of  briber3^  Public  officers  should  not  be  per- 
mitted, under  severe  penalties,  to  accept  these  petty  bril)es. 
One  who  does  accept  tips  of  this  kind  soon  finds  himself  servile 
to  those  from  whom  he  receives  them. 

.  I  trust  the  members  of  this  Convention  fully  appreciate  and 
comprehend  the  magnitude  and  importance  of  the  work  which 
they  have  undertaken,  and  that  they  will  not  rest  or  abate  their 
interest  until  it  is  accom{)lished.  If  Congress  will  not  respond 
to  the  powerful  influence  of  your  300.000  influential  business 
men,  then  I  see  no  other  way  than  to  let  the  abuses  grow  until 
the  people  are  fully  aroused,  and  then  the  matter  will  be  settled, 
and  settled  right. 

There  are  two  remedies  in  sight  for  the  correction  of  the 
abuses  complained  of:  One  is  strict  governmental  control  and 
the  otlier  is  Government  owne'rship.  We  are  approaching  one 
or  the  other  at  a  rapid  pace. 


Hon.  John  D.  Kernan,  of  New  York,  who  was,  from  1883  to 
1887,  chairman  of  the  New  York  State  Railway  Commission,  and 
was  author  of  the  original  Interstate  Commerce  Act,  was  then 
introduced  and  addressed  the  convention  as  follows : 

Address  ok  Hon.  John  D,  Kernan. 

Mr.  Chairman  and  Gentlemen:  The  Act  to  Regulate  Com- 
merce, approved  February  4.  1887,  was  the  determination  of 
Conu-ress.  after  many  years  of  asiitation  and  State  legislative  ex- 
periments, that  the  relation  between  the  j^eople  and  railroads 
should  be  regulated  by  a  national  statute,  broad  enough  to  cover 
all  interstate  commerce  by  rail  and  at  the  same  time  that  should 
be  conservatively  experimental  and  designed,  as  far  as  possible, 
to  secure  justice  and  protection  to  all  the  vast  interests  con- 
cerned. The  reasons  that  led  to  this  determination  were  briefly 
these  : 

1.  That  the  common  law,  the  courts  and  their  remedies  were 
inadequate  to  afford  any  practical  relief  as  between  shippers 


10 
O 

and  carriers,  or  even  between  carriers  themselves,  as  liad  been 
found  out  in  England,  the  home  of  the  common  law,  as  early 
as  1854. 

2.  That  the  competition  of  carriers,  markets,  and  waterways 
was  even  then  such  a  constantly  diminit^hing  factor  in  tiie  ex- 
pansive ciiuditions  of  the  country\s  trans|)()rtat.ion  business  as  to 
be  no  longer  a  sufficient  safeguard  against  the  evils  that  neces- 
sarily accompany  such  vast  railroad  tlevelopment  as  ours. 

3.  That  Congress,  having  no  time  to  investigate  and  fix  rates 
and  being  forliidden  by  the  Constitution  from  asking  the  courts 
to  combine  legislative  with  judicial  functions,  must  create  a  com- 
mission with  the  judicial  power  to  declare  an  existing  rate  to  be 
unjust  and  the  legislative  power  to  determine  what  it  should  be 
thereafter.  If  a  lO-cent  rate  is  right,  it  is  idle  to  adjudge  a  20- 
cent  rate  wrong  unless  the  authority  so  deciding  can  compel  the 
reduction  to  10  cents,  because  otherwise  the  carrier  can  forever 
defeat  justice  by  simply  reducing  to  I9i  cents,  and  by  then 
standing  pat  until  it  evades  the  next  decision  against  it,  by  re- 
ducing the  rate  to  \d\  cents,  and  so  on  ad  infinitum. 

During  the  ten  years  following  1887  the  experimental  nature 
of  tlie  act  was  recognized  bv  its  amendment,  so  as  to  require  the 
Comnnssion  to  report  annuallv  to  Congress  and  to  make  sug- 
gestions as  to  the  further  legislation  needed  to  perfect  the  law, 
b}'  the  provision  making  underi)illing  and  misdescription  crimes 
on  the  shipper's  part  and  by  the  act  compelling  the  giving  of 
testimony  before  the  Commission.  During  those  ten  years  the 
law  worked  well,  mainly  because  tliere  was  universal  acquies- 
cence in  the  idea  that  the  Commission  could  not  only  deter- 
mine the  riiiht  and  wrong  of  rates,  regulations,  and  classi- 
fications specifically  complained  of,  but  could  fix  the  rates, 
regukitions,  and  classifications  to  be  substituted  therefor.  In 
several  instances  the  railroads  themselves  asked  that  all  of  this 
power  be  exercised  by  the  Commission  in  contentions  between 
themselves.  In  over  400  cases  before,  the  Comnnssion  prior  to 
1897,  no  denial  of  the  existence  of  the  power  of  the  Connnission 
to  thus  fix  rates  upon  specific  complaint  appears  in  the  records 
of  the  Commission.  This  belief  in  the  ])ower  of  the  Commis- 
sion not  only  gave  relief  where  it  was  justified,  but  operated 
widely  as  a  wholesome  restraint  upon  carriers  in  their  dealings 
with  the  ])ublic.  The  knowledge  of  the  existence  of  this  power 
in  the  Commission  was  the  ounce  of  ])revention  that  was  better 
than  the  j)ound  of  cure.  No  suggestion  came  from  any  source 
during  those  years  that  such  power  in  the  Comujission  was 
dangerous  to  proi)erty  rights,  eitlier  as  the  law  tiien  was,  or  as  it 
might  be  administered.  The  Supreme  Court  never  declared 
any  decision  of  the  Commission  to  l)e  unjust  upon  the  merits. 
It  only  said  that  the  Commission  has  no  power  at  all  to 
make  decisions  fixing  rates.  'I'he  public  belief  in  the  exist- 
ence of  power  in   the  Commission   to  correct  abuses  allayed 


14 

public  excitement  against  railroads,  prevented  attempts  at 
hostile  and  ill-judged  legislation,  and  was  aiding  in  the 
development  along  safe  lines  of  Government  control  over 
railroails  through  the  hearings,  investigations,  and  decisions 
of  an  impartial  tribunal  that  served  to  educate  and  direct 
public  ojjinion. 

On  May  24,  1897,  in  the  case  of  the  Interstate  Commerce 
Commission  against  The  Cincinnati,  New  Orleans  and  Texas 
Pacific  Railway,  the  United  States  Supreme  Court  decided,  by  a 
divided  court,  that  Congress  had  not  conferred  upon  the  Com- 
mission the  legislative  power  of  fixing  rates,  either  maximum, 
minimum,  or  absolute.  This  meant  that  the  Commission 
could  investigate,  have  long  and  intricate  hearings,  report  for 
or  against  the  rates  and  practices  complained  of,  and  then 
that  railroads  could  do  as  they  pleased.  This  decision  con- 
signed to  the  rubbish  heap,  where  lie  buried  so  man}'  legisla- 
tive attempts  to  reguhite  railroad  rates  by  law,  the  essentiall}'' 
valual)le  features  of  the  Interstate  Commerce  Conunission  and 
much  of  the  machinery  provided  by  the  Act  to  Regulate  Com- 
merce and  designed  to  compel  justice  to  be  done  between  the 
])ublic  and  railroads.  It  emasculated  the  statute  and  left  little 
of  it  worth  preserving,  unless  there  be  now  added  to  it  by  Con- 
gress the  lost  link  of  power  to  fix  rates  upon  specific  complaint, 
after  hearing  and  investigation  ;  unless  there  be  incorporated  in 
the  law  b}'  further  legislation  what  everybody  supposed  was 
already  there  until  the  United  States  Supreme  Court  corrected 
our  misapprehension.  Tiiat  Congress  can  thus  amend  the  law, 
and  confer  upon  the  Commission  the  legislative  power  to  pre- 
scribe, and  through  the  courts  to  enforce  reasonable  and  just 
rates  in  place  of  those  found  to  be  otherwise,  is  not  open  to 
doubt,  as  it  has  repeatedly  been  affirmed  by  the  United  States 
Sui)reme  Court.  The  exercise  of  that  pt)wer,  whether  b\'  Con- 
gress or  by  any  delegated  agent,  such  as  a  commission,  cannot 
constitutionall}'^  confiscate  railroad  property  by  fixing  rates  that 
are  not  fairly  remunerative  to  the  carrier.  It  is  so  well  settled 
that  neither  Congress,  nor  its  agents,  can  override  the  wise  lim- 
itations of  the  Constitution  in  this  regard,  that  all  interested  in 
transportation — and  who  is  not? — can  fitvor  the  proposed  en- 
largement of  the  Interstate  Commerce  Statute  without  fear  that 
wrong  will  thereby  be  done  to  railroads  and  their  owners  through 
any  abuse  of  the  power  thus  placed  in  the  Commission.  Changed 
conditions  since  1887  and  the  outlook  for  the  future,  vehemently 
urge  that  in  so  far  as  the  Interstate  Commerce  Act  was  originally 
supposed  to  confer  the  rate-making  power  upon  the  Commission, 
it  shoubl  now  be  so  amended. 

Commissioner  Prouty  stated  before  the  Interstate  Commerce 
Committee  of  the  House  of  Representatives  last  winter  that  five 
S3'stems,  or  five  different  persons,  now  control  117,500  miles  of 
railroad.     These  are: 


15 

The  Vunderbilt 19,500 

The  Pennsylvania 18.000 

The  Mortvan-Hill 43,000 

The  Gould l(i,000 

The  Ilarrinian 21,000 


T 
T 


117.500 


As  soon  as  the  Atchison,  the  Rock  Ishmd,  the  San  Francisco, 
and  the  xMihvaukee  pass  into  the  liands  of  one  or  the  other  of 
these  gentlemen  they  will  control  the  entire  railway  situation, 
because  the  remaining  70,000  miles  of  roads  are  simpl}'  feeders, 
liaving  no  terminals  or  connections  except  witli  some  one  of 
these  systems.  If  the  regulation  by  law  of  these  combinations, 
as  originally  designed  by  the  Interstate  Commerce  Act,  be  car- 
ried out  by  enlarging  that  regulation  as  proposed,  and  such 
regulation  be  supplemented  by  im{)roving  and  holding  under 
national  and  State  control  free  comjieting  waterways,  wherever 
practicable,  little  danger  will  arise  from  these  combinations  in 
our  time,  but  otherwise  thev  now  give  cause  for  alarm,  both  to 
the  owner  and  consumer  of  transportation. 

Not  long  since,  a  coal  strike  caused  public  demand  for  the 
State  ownership  of  the  coal  mines  by  nearly  one-half  the  voters 
of  New  York  State.  Tomorrow  that  demand  w\\\  be  for  na- 
tional ownership  of  railroads  if  we  be  not  wise  in  time  b}'  pro- 
viding for  such  regulation  by  law  as  shall  protect  the  peo])le 
from  bearing,  and  restrain  railroads  from  seeking  unjust  rates 
and  discriminations. 

On  Januar}--  1.  1900,  the  railroads  raised  rates  on  849  articles 
about  31  per  cent  and  lowered  them  on  only  6.  This  was  done 
in  the  face  of  revived  business  conditions  and  of  lower  cost, 
owing  to  improved  methods  and  economics,  increased  tonnage, 
and  larger  loads,  that  more  than  offset  higher  prices  for  labor 
and  material.  Railroad  earnings  since  then  show  this  fact. 
Great  clamor  arose  among  shippers,  and  when  they  knocked  at 
the  door  of  the  Interstate  Commerce  Commission,  seeking  relief, 
the}^  were  told  that  the  Commission  had  no  power  to  do  any- 
thing about  it.  About  700  complainants,  representing  a  vast 
nutni)er  of  shii)pers,  were  thus  advised  that  their  Government 
could  not  aid  T)r  protect  them.  Can  any  one  be  so  blind  as  not 
to  see  that  such  a  situation  is  intolerable,  and  that,  continued 
and  aggravated  from  time  to  time,  as  must  be  the  case  in  the 
present  condition  of  the  law,  so  long  as  railroad-owners  are 
human,  it  will  sow  broadcast  the  seeds  of  discontent,  of  radical 
demands  and  agitation,  and  of  danger  to  our  great  country  and 
its  people?  Since  it  has  come  al)()Ut  that  freight  rates  deter- 
mine where  business  shall  be  done  and  who  shall  do  it,  even  as 
to  farm  products  that  ]iay  about  GO  per  cent  of  the  fifteen  hun- 
dred millions  of  dollars  that  railroads  yearly  collect,  do  not 
common  sense   and    prudent   foresight  demand    that  the  sole 


16. 

arbiter,  to  deterniiae  questions  as  to  rates  and  collateral  sub- 
jects, sliall  be  some  impartial  tribunal,  rather  than  the  sellers 
of  trans|)ortation  with  unrestrained  regard  for  anything  except 
their  own  immediate  interests? 

The  consensus  of  opinion  seems  to  be  that  the  Cooper-Quarles 
bill  reasonably  meets  the  demand  for  further  legislation  by 
Congress  upon  the  subject. 

It  provides  that  an  order  of  the  Commission,  made  upon  com- 
plaint and  after  hearing  and  determination,  declaring  an  existing 
rate  unreasonable  and  what  would  be  reasonable  for  the  future, 
shall  be  observed  by  the  railroad  within  30  days  after  notice,  or 
in  case  of  ai)peal  within  60  days,  unless  the  United  States  circuit 
court  grants  a  stay  pending  appeal ;  that  every  order  so  made,  as  to 
its  justness,  reasonableness,  and  lawfulness,  shall  be  reviewable 
by  the  United  States  courts  ;  that  the  penalt}^  for  disobedience  of 
the  order  so  made  and  in  case  of  ap[)eal,  approved  by  the  courts, 
shall  be  $5,000  per  day  of  continuance  of  violation.  It  will  be 
•observed  that  under  this  act  the  entire  initiative  of  rate  making 
is  properly  left  to  the  carriers.  The  Commission  itself  can  make 
no  order  except  upon  complaint  and  after  hearing  and  determi- 
nation ;  it  can  itself  undertake  no  rate  making  at  all,  except  when 
its  intervention  is  sought  to  pass  upon  a  rate  alread}^  made  by  the 
carrier  and  challenged  by  formal  complaint.  This  reduces  tlie 
power  of  the  Commission  to  that  minimum  of  interference  with 
rate  making  that  serves  the  double  purpose  of  leaving  carriers 
free  to  make  their  own  rates  and  at  the  same  time  of  affording 
to  the  public,  through  the  Commission  and  the  courts,  reasonable 
protection  against  abuse  by  the  carrier  of  its  })ower  and  oppor-  • 
tunities.  This  is  far  less  assumption  of  authority  over  inter- 
state carriers  than  has  long  prevailed,  with  ])ublic  approval,  in 
other  directions.  We  are  entirely  accustomed  to  view  without 
alarm  or  thought  of  unjust  encroachment  upon  property  rights 
the  absolute  fixing  by  statute  of  gas  rates,  water  rates,  cab  rates, 
elevator  and  warehouse  rates,  street  railroad  fares,  &c.  In 
twenty  States  railroad  rates  are  fixed  by  statute,  or  tli rough  com- 
missions <ib  initio,  and  with  no  such  conservative  limitations  as 
are  imposed  in  the  bill  proposed  by  the  friends  of  Interstate  Com- 
merce Act  amendment.  Unless  a  man  is  entirely  opposed  to 
regulation  by  law  of  carriers,  as  a  matter  of  principle,  it  would 
seein  as  though  nothing  more  conservative  or  well  safeguarded 
could  be  proposed  to  him  than  the  Cooper-Quarles  bill  in  sub- 
stance. 1  think  the  provision  that  the  court  '^  in  its  discretion 
may  uj)on  application  of  either  part}',  and  in  such  manner  as  it 
shall  direct,  cause  additional  testimony  to  be  taken  "  can  be  and 
ought  to  be  improved.  This  i)rovision  should  in  justice  read: 
The  court  "  in  its  discretion  may  upon  application  of  either 
party  cause  additional  testimony  to  be  taken  before  the  Commis- 
sion and  reqtdre  the  Commission  to  return  the  same  with  its  further 
report  and  opinion  thereon.^'' 


17 

Tlie  practice  of  permitting  carriers  to  hold  back  the  facts  be- 
fore the  C'oiniuission  and  then  to  (h*ag  out  and  dehiy  proceed- 
ings by  a  trial  de  noco  upon  the  facts  before  the  court,  is  utterly 
indefensible  and  entirely  subversive  of  justice.  When  carriers 
get  away  from  the  tribunal  that  is  trained  to  understand  tlieir 
business  and  that  cannot  V)e  misled  as  to  issues,  and  before  a 
judge  already  overburdened  with  cases,  or  a  master  or  referee  to 
whom  transportation  questions  are  Greek,  they  delay  decisions, 
baffle  and  pervert  justice,  and  fill  the  record  with  irrelevant 
matter  to  a  degree  that  is  lamentable  and  often  ridiculous.  This 
leads  to  the  waste  of  evervbody's  time  and  money,  and  usually, 
to  the  carrier,  victor}^  or  the  burial  of  the  original  issue  in  the 
forgetfulness  and  oblivion  of  a  past  age.  After  a  shipper  whose 
complaint  is  filed  in  his  youth  dies  of  old  age,  the  disposition  of 
his  case  is  of  no  use  to  his  business  ! 

In  the  case  of  Cincimiati,  New  Orleans  and  Texas  Pacific 
Railwav  Company  vs.  Interstate  Commerce  Commission,  162 
U,  S.  Reports,  p.  194,  &c.,  the  Supreme  Court  of  the  United 
States  has  condemned  the  present  practice,  proposed  to  be  con- 
tinued under  the  Cooper-Quarles  bill,  and  has  in  substance 
approved  of  the  change  that  I  propose  in  the  following  language  : 

'■  We  think  this  a  proper  occasion  to  express  disapproval  of 
such  a  method  of  procedure  on  the  part  of  the  railroad  com- 
panies as  should  lead  them  to  withhold  the  larger  part  of  their 
evidence  from  the  Conimission,  and  first  adduce  it  in  the  circuit 
court.  The  Commission  is  an  administrative  board,  and  the 
courts  are  only  to  be  resorted  to  when  the  Commission  prefers 
to  enforce  the  provisions  of  the  statute  by  a  direct  proceeding 
in  the  court,  or  when  the  orders  of  the  Commission  have  been 
disregarded.  The  theory  of  the  act  evidently  is,  as  shown  by 
the  provision  that  the  findings  of  the  Commission  shall  be  re- 
garded as  prima  facie  evidence,  that  the  facts  of  the  case  are  to 
be  disclosed  before  the  Commission." 

It  would  greatly  facilitate  and  cheapen  the  cost  of  proceed- 
ings and  promote  justice  to  have  all  the  evidence  taken  before 
the  Commission.  If  parties  understood  that  the  holding  back 
of  their  evidence  would  only  result  in  their  being  sent  back  to 
offer  it  before  the  original  tribunal,  there  would  cease  to  be  any 
such  withholding  in  the  first  instance,  and  yet  there  would  not 
be  denied  to  parties  the  opportunity  to  supply  omissions,  caused 
by  accident  or  by  changed  conditions. 

Nothing  worth  having  comes  without  push  and  pluck.  The 
Interstate  Commerce  Act  was  the  result  of  united  and  virile  activ- 
ity on  the  part  of  the  great  commercial,  laboring,  manufacturing, 
and  farming  interests  of  the  country.  Its  amendment,  as  orig- 
inally intended,  from  time  to  time,  to  the  point  where  it  can  have 
a  fair  trial  in  as  nearly  a  perfect  condition  as  possible,  can  only 
be  brought  about  V)y  the  action  of  those  same  interests,  pressing 
forward  in  solid  phalanx  towards  the  goal  of  securing  just  and 
complete  regulation  by  law  of  all  carriers  engaged  in  interstate 

9 


18 

soramerce.  It  is  most  fitting  that  they  meet  and  pledge  them- 
celves  to  each  other  to  spare  no  effort  to  induce  Congress  to  restore 
the  Interstate  Commerce  Act  to  its  original  design,  at  a  time  and 
place  where  this  great  Exposition  is  proclaiming  to  the  world 
the  achievements  of  American  citizens  in  the  past  and  their 
hopes  and  promises  for  the  future. 


Hon.  D.  R.  Francis,  President  of  the  Louisiana  Purchase  Ex- 
position, ex-Secretary  of  the  Interior,  and  ex-governor  of  Mis- 
souri, was  introduced  and  spoke  as  follows:  , 

Address  of  President  D.  R.  Francis.] 

Mr.  Chairman  and  Gentlemkn:  I  cannot  refrain  from  ex- 
Dressing  surprise  and  gratification  to  see  this  large  and  repre- 
sentative body  of  men  assembled  here  for  the  pur|)Ose  of  con- 
ferring concerning  interests  which  are  dear,  not  only  to  them, 
but  which  affect  every  section  of  the  country  and  every  industry 
throughout  the  land.  I  was  not  aware  that  there  would  be  such 
a  large  body  of  representative  men  attending  this  meeting.  That 
attendance  demonstrates  incontrovertibly  the  magnitude  of  the 
interests  at  stake  and  the  very  deep  convictions  you  have  con- 
cerning the  matters  that  have  brought  you  together. 

The  Exposition  management  feels  complimented  that  you  have 
selected  their  grounds  for  your  |)Uice  of  meeting.  It  is  my  duty 
and  my  privilege  first  to  extend  to  you  a  very  cordial  welcome 
to  these  grounds,  and  to  express  the  hope  that  your  stay  here 
may  be  [)leasant  and  profitable;  that  you  may  find  time  be- 
tween your  deliberations  to  make  at  any  rate  a  cursory  inspec- 
tion of  these  grounds,  of  the  palaces  of  exhibits,  of  the  pavilions 
of  foreign  countries  and  of  the  States,  and  that  you  may  see 
something  of  what  those  l)uildings  contain,  and  also  to  express 
the  hope  that  your  deliberations  here  may  be  successful  and  to 
your  satisfaction  in  an  eminent  degree. 

I  do  not  propose  to  detain  you  at  great  length  on  any  subject, 
and  I  have  spoken  so  often  concerning  the  Exposition,  concern- 
ing the  history  of  its  organization,  its  operation,  and  what  I 
think  its  effects  or  results  will  be,  that  I  alwa\'s  hesitate  to  even 
toucli  upon  such  subjects  for  fear  there  may  l)e  men  in  my  au- 
diences who  have  heard  me  before  on  the  same  subject. 

But,  gentlemen,  the  interest  that  calls  you  together  is  one  that 
is  dear  to  every  citizen  of  this  country.  The  Interstate  Com- 
merce Law,  as  you  know,  was  the  result  of  what  the  people  of 
the  country  thought  to  be  exorbitant  demands  on  the  part  of 
the  railroads.  The  railroads  were  demanding  as  compensation, 
not  what  the  service  was  worth,  but  what  the  traffic  would  bear. 
Considerable  effort,  as  well  as  ability,  was  required  to  pass  the 


19 

Interstate  Commerce  Law  as  it  was  enacted.  I  know  that  many 
of  the  shii>per.s  of  the  country — I  am  a  large  slii()i)er  myself— 
have  felt  at  times  that  the  railroads  tlid  not  treat  them  properly. 
I  helieve  that  the  sentiment  througiiout  tlie  country  to  the  effect 
that  the  provisions  of  the  Interstate  Commerce  Law  are  not  en- 
forced, has  some,  or  a  great  deal  of  foundation,  and  I  helieve 
that  every  law  should  be  enforced.  Even  a  bad  law  should  be 
enforced,  because  the  enforcement  of  it  will  lead  promptly  to  its 
repeal  or  amendment. 

There  have  been  waves  of  public  sentiment  in  this  country, 
as  you  know,  for  at  least  twenty-five  years  past — I  can  remem- 
ber back  that  far  myself  and  I  think  most  of  my  auditors  can — 
where  there  have  been  uprisings,  as  it  were,  against  the  railroads 
and  when  the  charges  made  against  the  railroads  were  of  such  a 
radical  nature  and  carried  to  such  an  excess  that  there  has  been 
a  revulsion  of  feeling,  and  the  railroads  have  then  been  given 
liberty  to  do  what  they  were  prohibited  from  doing  at  times 
when  that  sentiment  was  strongly  against  them. 

I  believe  myself  that  the  railroads  of  this  country  should  never 
be  owned  by  the  Government.  I  do  not  think  that  is  the  proper 
function  of  a  republican  form  of  government — to  own  railroads 
and  operate  them.  I  have  not  exactly  arrived  at  that  conclu- 
sion concerning  telegraph  lines.  Of  course  there  can  be  no  ques- 
tion in  the  minds  of  the  people  of  this  country  as  to  the  wisdom 
of  the  Government  carrying  its  own  mails,  and  the  telegraph 
business  is  so  closely  allied  to  the  mail-carrying  business  of  the 
country  that  I  have  often  had  doul)ts  in  my  mind  as  to  whether 
the  Government  should  not  own  and  operate  the  telegraph  lines  ; 
but  I  have  never  believed,  and  I  cannot  say  that  I  am  even 
drifting  t(Mvard  the  conclusion  in  any  degree,  tliat  the  railroads 
of  the  coimtry  should  be  owned  and  operated  by  the  Govern- 
ment. I  believe  that  it  would  build  up  a  large  office-holding 
class  that  would  eventually  become  an  aristocracy. 

I  have  never  been  a  very  strong  advocate  of  civil  service, 
because  I  believe  that  tends  to  perpetuate  men  in  office.  I  l)e- 
lieve  that  there  should  be  a  change  of  the  administration  of  this 
country  whenever  the  people  by  their  vote  decide  there  shovdd 
be  a  change.  And.  while  all  those  convictions  may  be  held  by 
individuals,  there  is  nothing  inconsistent  between  those  opinions 
and  the  belief  that  the  railroads  of  the  country  should  be  regu- 
lated by  the  Government. 

I  have  said  before  in  public  talks  that  when  the  railroads  are 
given  the  right  of  eminent  domain  in  this  country,  when  they 
have  a  right  to  confiscate  or  appropriate  land  and  houses,  I 
think  they  should  be  amenable  to  regulation  by  the  Govern- 
ment. No  private  corporation  has  the  right  to  appropriate 
your  land  or  mine.  It  is  given  to  a  railroad  cotnpany,  and 
when  a  railroad  has  that  right,  the  right  of  conclcm nation 
through  private  property,  it  becomes  so  nearly  allied  with  the 
Government  that  although  it  may  be  owned  by  private  stock- 


20 

holders,  it  should  be  subject  to  regulation  by  the  Government 
of  the  land. 

The  story  told  b}^  the  chairman  concerning  the  legislator  in 
Kansas,  wiio,  while  refusing  to  use  a  trip  pass,  held  on  to  his 
annual,  is  an  apt  illustration  of  conditions  existing  in  this 
couiitr}'^  today,  and  they  do  not  apply  solely  to  legislators. 
You  will  find  large  interests  in  this  country  that  are  favored  by 
the  railroads,  notwithstanding  the  Interstate  Commerce  Law, 
and  you  will  find  that  it  is  tlie  interest  and  the  influence  of 
those  large  interests  that  prevents  the  enactment  of  just  such 
bills  as  you  are  advocating  here  today. 

I  am  a  quasi-railroad  man ;  T  have  owned  railroads — I  mean 
thatabsolutel3^  I  remember  owning  one  railroad — it  was  not  a 
ver}^  long  one — and  of  being  a  half-owner  in  another  railroad. 
As  1  have  said  to  railroad  men  in  this  country,  in  a  jesting  way, 
a  nuniber  of  times,  I  have  tried  to  "  butt  "  into  the  railroad  busi- 
ness in  this  country  time  and  again,  twice  to  m}^  positive  recol- 
lection, but  I  have  alwa^^s  found  people  who  tliought  more  of 
the  |)roperty  than  I  did  and  who,  if  1  would  not  sell  it  to  them, 
forcibly  took  it  away  from  me.  Of  course  1  mean  that  as  a  pleas- 
antry, but  1  am  sure,  gentlemen,  there  is  something  in  this  coun- 
try which  in  my  judgment  is  above  pecuniary  interests,  and 
I  think  that  that  citizen  does  not  rise  to  the  proper  plane  of 
citizenship  in  this  country  who  cannot  see'  the  welfare  of  the 
countr}^  as  contradistinguished  from  his  own  interests. 

A  man  is  shortsighted  who  will  make  his  personal  interests 
paramount  to  the  general  welfare  of  the  community  in  which  he 
lives  or  the  country  to  which  he  acknowledges  allegiance.  It 
may  be  that  for  a  time,  for  a  generation  he  niay  enjo}'  the  bene- 
fits and  the  luxuries  of  such  a  })olicy,  but  if  all  were  able  to  es- 
pouse and  advocate  and  practice  such  theories,  then  our  institu- 
tions would  l)e  overthrown  and  our  descendants  who  come  after 
us  would  either  belong  to  the  favored  classes  or  to  the  subject 
classes.  Now,  if  the  railroads  of  this  country  are  to  be  permitted 
to  own  the  country,  are  to  be  permitted  to  name  the  legislators, 
and  to  dictiite  the  legislation,  there  is  no  question  as  to  what 
the  result  will  be:  This  will  be  a  Republic  in  name  and  not  in 
reality. 

I  have  had  occasion  a  number  of  times  lately  to  address  or- 
ganizations in  the  Tem[)le  of  Fraternity.  The  Temple  of  Fra- 
ternity is  a  building  on  these  grounds  that  was  erected  by  an 
association  of  the  fraternal  and  benevolent  societies  of  the 
United  States.  They  represent,  these  societies  associated  in  this 
building,  a  membership  of  nearly  eight  millions  of  people. 
They  are  the  bone  and  sinew  of  this  land.  They  are — I  do  not 
like  to  use  the  ex[)ression,  but  it  is  descriptive — they  are  the 
"  middle  class,"  if  you  wish.  They  are  not  the  laboring  man, 
if  you  call  a  laboring  man  one  who  works  for  so  much  an  hour. 
They  are  not  the  capitalists  of  the  country,  but  they  are  the 
bone  and  sinew  that  protect  the  community  and  protect  society 


21 

against  anarchism  on  the  one  hand  and  mono[)()ly  on  the  otiier. 
It  is  such  a  class  of  people  as  that,  that  this  Republic  of  ours 
must  rely  u|)on  for  its  preservation,  and  if  we  are  i^oinij;  to  per- 
mit all  the  great  transportation  interests  of  this  country  to  unite, 
to  work  toujether  for  their  own  interests,  regardless  of  the  general 
interests  of  the  country  through  which  the}'  operate,  then  I  say 
we  are  not  living  and  acting  in  the  spirit  of  our  institutions, 
because  those  men  who  operate  railroads,  if  they  will  and  if 
the\'  are  given  the  power,  can  destroy  cities  or  can  make  new 
cities.  The}'  have  a  power  which  is  not  the  will  of  the  majority 
of  the  people  in  this  country,  and  whenever  we  adopt  any  policy 
that  does  not  depend  upon  the  will  of  the  majority  of  the  people 
in  a  republican  form  of  government,  then  the  days  of  that  Re- 
public are  numbered. 

Gentlemen,  it  is  not  ray  desire,  nor  is  it  my  duty,  perhaps  it 
is  unbecoming  in  me,  to  philosophize  concerning  these  matters. 
I  am  here  as  the  President  of  this  Kxposition.  I  could  not  re- 
frain from  giving  expression  to  these  views  as  I  have,  but  I  am 
here  for  the  purpose  of  asking  you  to  make  yourselves  at  home 
upon  these  grounds,  to  see  what  has  been  done  by  the  |)eople, 
not  only  of  St.  Louis  and  of  Missouri,  not  only  by  the  people 
of  the  United  States  and  our  possessions,  but  by  the  people  of 
the  civilized  world,  toward  assembling  here  exhibits  of  the  best 
jjroducts  of  the  brain  and  brawn  of  man.  I  think  of  nothing 
that  is  a  more  potential  agency  in  promoting  systematic  and 
uniform  development  of  the  energies  of  man  than  a  universal 
exposition  such  as  this.  Foreign  countries  have  participated  in 
this  Exposition  to  an  extent  be3'ond  the  most  sanguine  liopes  of 
those  who  are  interested  in  the  organization  of  the  Exposition. 
Our  own  countrv,  almost  without  exception  our  States  are  all 
represented  here,  and  without  any  exception  in  the  shape  of 
an}'  section  of  our  country  this  Exposition  ret)resents  what  the 
United  States  is  and,  as  has  been  well  said,  what  its  hopes  and 
promises  are.  Foreign  countries  have  made  more  characteristic 
and  more  representative  exhibits  here,  in  my  judgment,  than 
they  have  ever  made  at  any  other  exposition.  As  I  have  said 
on  more  than  one  occasion,  Germany  has  such  an  exhibit  in 
this  Exposition  as  was  never  excelled  by  the  exhibit  of  any 
country  in  a  foreign  country.  France  and  England  and  Austria 
and  South  American  countries  and  Central  American  countries 
as  well  are  all  represented  here.  Here  you  can  see  what  each 
country  has  been  doing  in  every  line  of  human  industry.  The 
German  people  have  made  wonderful  progress  in  manufiicturing 
industries  during  the  past  ten  or  fifteen  years.  They  are  here 
showing  what  they  have  accomplished.  They  are  here  repre- 
sented by  the  most  scientific  ])eople  of  the  Empire,  pre[)ared  to 
take  advantage  of  any  advancement  that  any  other  countries 
may  have  made  beyond  what  Germany  has  accomplished  ;  and 
so  we  of  the  United  States  have  an  opportunity  to  see  what 


22 

other  people  have  done,  and  if  their  methods  are  better  than 
ours,  if  their  appliances  are  in  an}'  way  superior  to  ours,  it  is 
not  necessary  to  say  that  American  ingenuity  will  adopt  those 
methods  and  those  api)liances.  So  that  every  ex])osition  of 
this  character  is  not  only  a  marker  of  the  progress  that  has  been 
made  by  the  world,  but  is  the  beginning  of  a  new  era  in  the 
industrial  development  of  the  world.  The  Chicago  Exposition 
was  the  hegiiniing  of  a  new  era  in  the  manufacturing  industries 
in  this  country.  Our  exports  of  manufactured  goods  have  in- 
creased several  hundredfold  within  the  past  eleven  years,  and, 
in  my  judgment,  a  ver}'  great  percentage  of  that  increase  can  be 
attributed  to  the  Chicago  Exposition.  And  so,  after  this  Expo- 
sition, there  will  be  changes,  if  not  revolutions,  in  the  manu- 
facturing industries  of  this  and  of  other  countries. 

The  educational  benefits  of  this  Exposition  are  incalculable ; 
they  cannot  be  overestimated.  The  section  in  which  this  Expo- 
sition was  held  was  never  favored  with  a  universal  exposition 
before  this,  and  I  think  it  will  be  at  least  a  generation  before 
we  have  another  in  this  section.  These  universal  expositions 
are  such  tremendous  undertakings  that  few  communities  have 
the  courage  to  enter  upon  them.  When  you  bear  in  mind  that 
this  community,  with  a  population  of  seven  hundred  thousand 
people,  was  willing  to  advance  ten  millions  of  dollars,  and  that 
there  are  men  in  the  community  who  were  willing,  without 
comi)ensation,  to  devote  three  or  four  years  of  their  time  and 
effort  to  the  Exposition  (the  city  and  community,  without  any 
expectation  of  receiving  in  return  any  of  the  ten  million  dol- 
lars, and  the  men  without  any  expectation  of  compensation  in 
the  shape  of  salaries),  it  is  rather  an  unusual  occurrence. 

Governor  Francis  then  spoke  at  some  length  in  regard  to  the 
accomplishments  of  the  Exposition,  and  in  conclusion  said : 

I  am  glad  you  are  here.  We  appreciate  the  encouragement 
you  give  us  by  your  presence.  We  trust  when  you  return  to 
your  homes  you  may  tell  those  people  there  who  have  not  been 
to  this  Exposition  what  you  have  seen  and  induce  them  to  come, 
if  possible,  because  we  believe  that  those  who  fail  to  come  to 
this  Exposition  from  this  time  on  will  be  more  the  losers  than 
the  Exposition  itself. 

I  thank  you  sincerely  for  your  very  considerate  attention, 
gentlemen;  ngain  congratulate  you  upon  the  representative 
character  of  this  assemblage,  and  desire  to  emphasize  the  hope 
expressed  in  the  beginning  of  my  remarks,  that  your  delibera- 
tions may  be  satisfactoi'y  and  successful  in  every  respect. 

President  H.  D.  Loveland  responded  to  the  greeting  of  Gov- 
ernor Francis  in  an  appropriate  and  interesting  manner. 


23 

The  President  then  announced  the  following  coniniittee  ap- 
pointments : 

Committee  on  Rules. 

Chairman,  Mr.  C.  H.  Seybt,  St.  Louis,  Mo.,  representing  St. 
Louis  Merchants'  Exchange. 

Hon.  \V.  A.  Harris,  Kansas,  representing  American  Short 
Horn  Breeders'  Association. 

Mr.  L.  B.  Boswell,  Quincy,  111.,  representing  Quincy  Freight 
Bureau. 

Mr.  M.  S.  Blish,  Seymour,  Ind.,  representing  Winter  Wheat 
Millers'  League. 

Mr.  J.  T.  Hoile,  Brooklyn,  N.  Y.,  representing  Manufacturers' 
Association  of  New  York. 

Committee  on  Finance. 

Chairman,  Mr.  J.  E.  Howard,  Wichita,  Kans.,  representing 
"Wichita  Chamber  of  Commerce. 

Mr.  R.  W.  Higbie,  New  York  city,  representing  National 
Wholesale  Lumber  Dealers'  Association. 

Mr.  R.  S.  Lyon,  Chicago,  111.,  representing  Chicago  Board  of 
Trade. 

Mr.  Murdo  Mackenzie,  Trinidad,  Colo.,  representing  Cattle 
Growers'  Interstate  Executive  Committee. 

Mr.  G.  A.  Davis,  Grand  Rapids,  Mich.,  representing  Grand 
Rapids  Board  of  Trade. 

Mr.  T.  B.  Dunn,  Rochester,  N.  Y.,  representing  Rochester 
Chamber  of  Commerce. 

Mr.  .J.  W.  Roos.  Natchez,  Miss.,  representing  Natchez  Cotton 
and  Merchants'  Exchange. 

By  motion,  this  committee  was  made  permanent. 

Committee  on  Resolutions. 

Chairman,  Mr.  E.  P.  Bacon,  Milwaukee,  Wis.,  representing 
Milwaukee  Merchants'  and  Manufacturers'  Association. 

Mr.  C.  B.  Cole,  Chester,  111.,  representing  Millers'  National 
Association. 

Mr.  A.  C.  Rulofson,  San  Francisco,  Cal.,  representing  State  of 
California. 


24 

Mr.  J.  T.  Sickle,  Chicago, .111.,  representing  Chicago  Board  of 
Trade. 

Mr.  E.  C.  Kreider.  Jacksonville,  111,  representing  Illinois  State 
Millers'  Association. 

Mr.  C.  B.  Rile}',  Indianapolis,  Ind.,  representing  Indiana 
Grain  Dealers'  Association. 

Mr.  W.  B.  Still  well,  Savannah,  Ga.,  representing  National 
Lumber  Manufacturers'  Association. 

Mr.  J.  E.  Evans,  Emporia,  Kans.,  representing  Southwestern 
Lumbermen's  Association. 

Mr.  Geo.  F.  Mead,  Boston,  Mass,  representing  Boston  Fruit 
and  Produce  Exchange. 

Mr.  G.  C.  VV^arren,  Saginaw,  Mich.,  representing  Michigan  Hay 
Association. 

Mr.  E.  M.  Ferguson,  Duluth,  Minn.,  representing  Duluth  Pro- 
duce and  Fruit  Exchange. 

Mr.  R.  S.  Powell,  Duluth,  Minn.,  representing  Duluth  Com- 
mercial Club. 

Mr.  E.  S.  Tomkins,  St.  Louis,  Mo.,  representing  St.  Louis 
Merchants'  Exchange. 

Mr.  G.  T.  Moon,  New  York  City,  representing  New  York 
Manufacturers'  Association. 

Mr.  Frank  Kell,  Wichita  Falls,  Texas,  representing  Texas 
Millers'  Association. 


The  Secretary  was  then  instructed  to  call  the  roll,  according 
to  the  list  of  delegates  rej^orted  by  the  several  constituent  organi- 
zations prior  to  the  Convention.  One  hundred  and  fifty  dele- 
gates, from  twenty-five  States,  representing  one  hundred  and 
ten  organizations,  answered  and  were  recorded  present,  consti- 
tuting a  fair  quorum  of  the  convention. 


Mr,  E.  M.  Ferguson,  of  Duluth,  Minnesota,  representing  the 
Duluth  Produce  and  Fruit  Exchange  and  the  Duluth  Commer- 
cial Club,  presented  a  resolution  as  follows  : 

1.  Be  it  resolved.  That  the  Act  to  Regulate  Interstate  Com- 
merce should  be  amended  in  the  following  particulars,  to  wit : 
Empower  the  Interstate  Commerce  Commission'  to  modify, 
change,  and  adjust  transportation  rates  substantial!}'  as  i)rovided 
in  the  Cooper-Quarles  Bill  now  pending  before  Congress. 


25 

2.  Require  common  carriers  engii'Sed  in  interstate  commerce, 
to  furnisli  all  the  rolling  stock  and  other  instrumentalities  for 
the  safe  carriage  of  freight  originating  on  their  several  lines,  and 
forbid  all  such  carriers  hauling  cars  carrying  freiglit  of  any  and 
ever}'-  description  that  are  not  owned  and  controlled  b}'-  such 
carriers  themselves  or  by  other  common  carriers. 

3.  Provide  that  every  charge  incident  to  the  safe  carriage  of 
freight  shall  be  comprised  in  the  freiglit  rate,  as  fixed  and  filed 
with  the  Interstate  Commerce  Commission,  so  that  the  same 
shall  furnish  full  and  com})lete  data  from  which  it  can  be  deter- 
mined what  it  will  cost  to  safely  transport  any  article  of  freight 
from  one  to  another  given  point. 

4.  Make  as  full  and  complete  provisions  for  examination  into 
the  business  and  the  accounts  of  common  carriers  engaged  in 
inter^ate  commerce,  by  the  Interstate  Commerce  Commission,  as 
are  those  now  applicable  to  national  banks. 

5.  Prohibit  common  carriers  engaged  in  interstate  commerce, 
their  officers  or  duly  authorized  agents,  dealing  in  any  article  of 
freight  carried  by  them. 

6.  Provide  that  whenever  a  ship})er  claims  to  have  been  dam- 
aged by  an}'  act  of  a  common  carrier  subject  to  the  provisions 
of  the  Interstate  Commerce  act,  such  shi[)per  may  bring  suit  in 
the  United  States  district  or  circuit  court  of  his  own  residence, 
and  make  the  process  of  such  courts  in  such  case  run  to  any 
and  every  point  in  the  United  States. 

7.  Prohibit  common  carriers  or  their  employees  giving  infor- 
mation about  shipments  while  en  route,  to  any  one  other  than 
the  consignor  and  consignee  and  their  agents  and  employees. 

8.  Provide  that  any  common  carrier  subject  to  the  provisions 
of  the  Act  to  Regulate  Interstate  Commerce,  shall  not  limit  or 
restrict,  or  attempt  to  limit  or  restrict  its  lial)ility  as  it  exists  at 
common  law,  by  any  general  or  special  notice,  or  by  inserting 
exceptions  in  the  bill  of  lading  or  memorandum  given  upon  the 
receipt  of  the  goods  for  transportation,  or  in  any  other  manner 
whatever,  and  no  special  agreement  made  in  contravention 
hereof  shall  be  valid. 

9.  Prohil)it  any  and  every  transit  privilege  in  the  carriage  of 
freight,  the  terms  and  conditions  of  which  are  not  fully  specified 
in  their  published  tariffs  filed  with  the  Commission. 

10.  Be  it  resolved,  That  the  attention  of  Congress  is  hereby 
called  to  the  fact  that  gross  discriminations  are  i)racticed  by 
common  carriers  in  the  matter  of  demurrage  charges,  with  the 
resultant  effect  that  hundreds  of  cars  are  used  by  the  trusts  and 
other  interests  as  warehouses  for  the  storage  of  their  products, 
free  of  charge,  thereby  materially  diminisliing  the  numl)er  of 
cars  available  for  general  commercial  purposes,  to  the  irrepa- 
rable loss  and  damage  of  the  shipping  public  ;  and  therefore  be 
it  further 

Resolved,  That  in  so  far  as  demurrage  charges  are  a  matter  of 
Federal  jurisdiction,  Congress  is  respectfully  urged  to  prohibit 


■26 

all  discriminative  demurrage  practices,  and  that  carriers  be  re- 
quired in  all  cases  to  levy  and  collect  a  uniform  demurrage 
charge ;  provide  efficient  sanctions  and  penalties  to  insure  the 
observance  of  these  duties  and  })rohibitions  by  common  carriers, 
and  clothe  the  Interstate  Commerce  Commission  with  full  juris- 
diction to  inquire  into  the  practices  of  common  carriers  in  respect 
to  these  duties  and  prohibitions,  and  to  make  effective  orders  in 
the  premises. 

This  resolution  was  referred  to  the  Committee  on  Resolutions, 
and,  upon  subsequent  favorable  report  of  said  committee,  was 
adopted  (page  51). 

Announcement  was  made  that  the  next  session  of  this  Con- 
vention would  be  held  in  the  Hall  of  Congresses,  at  10  o'clock 
a.  m.  on  the  following  day. 

At  1.15  o'clock  p.  m.  the  Convention  arose. 


SECOND  SESSION. 

St.  Louis,  Mo.,  October  29,  190 J^. 

The  Interstate  Commerce  Law  Convention  was  called  to  order 
at  10  o'clock  a.  m.  on  the  above  date,  in  the  Hall  of  Congresses, 
Louisiana  Purchase  Exposition  grounds,  by  Vice-President 
R.  W.  Higbie,  announcement  being  made  that  President  Love- 
land  had  been  called  upon  to  return  to  his  home.  I^^i 

Announcement  was  made  of  the  appointment  of  the  following 
Executive  Committee  for  the  ensuing  term: 

Mr.  E.  P.  Bacon,  of  Milwaukee,  Wis. 

Mr.  C.  H.  Seybt,  of  St.  Louis,  Mo. 

Mr.  R.  S.  Lyon,  of  Chicago,  111. 

Judge  S.  H.  Cowan,  of  Ft.  Worth,  Texas. 

Mr.  J.  E.  Howard,  of  Wichita,  Kans. 

Ex-Gov.  Wm.  Larrabee,  of  Clermont,  Iowa. 

Mr.  R.  W.  Higbie,  of  New  York  city,  N.  Y. 

Mr.  H.  D.  Loveland,  of  San  Francisco,  Cal. 

Mr.  Murdo  Mackenzie,  of  Trinidad,  Colo. 


The  Committee  on  Credentials  then  submitted  its  report,  as 
follows : 


27 

To  the  Interstate  Commerce  Law  Convention.  

Gentlemen  :  Your  Committee  on  Credentials  begs  leave  to 
report:  We  have  examined  the  credentials  of  the  following 
delegates  to  this  Convention,  and,  finding  them  correct,  we 
recommend  that  these  gentlemen  be  seated  as  the  duly  accred- 
ited representatives  of  their  respective  associations  : 

National  and  Sectional  Organizations 

American  Shippers'  Association — 

L.  T.  Jamme,  Cliicago,  111. 

E.  E.  Williamson,  Cincinnati,  O. 

American  Short  Horn  Breeders'  Association — 

W.  A.  Harris,  Chicago,  111. 

Cattle  Growers'  Interstate  Exc.  Committee — 

Murdo  Mackenzie,  Trinidad,  Colo. 
W.  A.  Harris,  Cliicago,  JU. 
A.  E.  de  Ricqles,  Denver,  Colo. 
Alex.  Bowie,  Chugwater,  Wyo. 
M.  M.  Sherman,  Geneseo,  Kas. 
A.  L.  Ames,  Buckingham,  la. 
W.  G.  Comstock,  Ellsworth,  Neb. 
H.  C.  Wallace,  Des  Moines,  la. 

Central  Yellow  Pine  Association — 

Geo.  S.  Gardiner,  Laurel,  Miss, 
I.  C.  Enoch,  Jackson,  Miss. 

Manufacturers'  Association  "of  the  Northwest — 

G.  H.  Mclsaac,  Portland,  Ore. 
Millers'  National  Association — 

C.  B.  Cole,  Chester.  lU. 

Millers'  National  Federation — 

L.  T.  Jamme,  Cliicago,  111. 
H.  T.  Bradley,  New  York  Qty. 
Wm.  N.  Howe,  Grand  Rapids,  Mich. 
C.  C.  Bovee,  .Minneapolis,  Minn. 

Mississippi  &  Louisiana  Lumbers  Dealers'  Association — 

W.  G.  Harlow,  Yazoo  City,  Mich. 

National  Board  of  Trade — 

J.  T.  McHugh,  Cincinnati,  Ohio. 

F.  A.  Scott,  Cleveland,  Ohio. 
N.  B.  Kelly,  Philadelphia,  Pa. 

National  Dining  Table  Association — 
H.  A.  Higby,  Charlotte,  Mich. 

National  Farmers'  Exchange— 

F.  E.  Andrew.s,  Sterling,  111. 

A.  G.  Van  Patten,  Van  Patten,  111. 

National  League  of  Commission  Merchants — 

John  C.  Scales,  Chicago,  111. 
C.  B.  Ayres,  Chicago,  111. 


28 

National  Live  Stock  Association — 

John  W.  Springer,  Denver,  Colo. 
Fred.  P.  Johnson,  Denver,  Colo. 
John  W.  McMillan,  Boise,  Idaho. 
F.  J.  Hagenbarth,  Salt  Lake  Qty,  Utah. 
Murdo  Mackenzie,  Trinidad,  Colo. 

National  Lumber  Manufacturers'  Association — 

C.  I.  Millard,  St.  Louis,  Mo. 
W.  B.  Stillwell,  Savannah,  Ga. 
W.  C.  Perry,  Kansas  City,  Mo. 

National  Paint,  Oil  and  Varnish  Association — 

J.  W.  Bray,  St.  Louis,  Mo. 
John  S.  Klein,  St.  Louis.  Mo. 
H.  H.  Clark,  St.  Louis,  Mo. 

National  Retail  Grocers'  Association — 
Simon  Clark,  Duluth,  Minn. 

National  Wholesale  Druggists'  Association — . 

Theo.  F.  Meyer,  St.  Louis,  Mo. 
C.  H.  West,  St.  Louis,  Mo.  . 

National  Wholesale  Lumber  Dealers'  Association — 
Robt.  W.  Higbie,  New  York  City. 

National  Wool  Growers'  Association — 
Mortimer  Levering,  Chicago,  111. 

New  England  Shoe  &  Leather  Association — 

Geo.  F.  Daniels,  Boston,  Mass. 

North  Carolina  Pine  Ass'n — (Comprising  North  and  South  Car.  and  Va.) — 

W.  J.  Edwards.  Sanford,  N.  C. 
R.  S.  Cohn,  Norfolk,  Va. 

Pacific  Coast  Hardware  &  Metal  Association — 
H.  J.  Morton   San  Francisco,  Cal. 

Pacific  Coast  Jobbers  and  Manufacturers'  Association — 
H.  D.  Loveland,  San  Francisco,  Cal. 

Southeastern  Millers'  Association — 

W.  R.  Donnelly,  Nashville,  Tenn. 

Southern  Hardware  Jobbers'  Association — 
W.  E.  Newill,  Atlanta,  Ga. 

Southwestern  Lumbermen's  Association — 
S.  H.  Fullerton,  St.  Louis,  Mo. 
E.  C.  Robinson,  St.  Louis,  Mo. 
E.  R.  Darlington,  St.  Louis,  Mo. 
J.  A.  Reheis,  St.  Louis,  Mo. 
E.  R.  Burkholder,  Hillsboro,  Kansas. 
J.  E.  Evans,  Emporia,  Kansas. 
Harry  A.  Gorsuch,  Kansas  City,  Mo. 


29 


Southwestern  Mercantile  Association — 

Dr.  L.  E.  Lehmberg,  St.  Louis,  Mo. 
H.  J.  Bube,  St.  Louis,  Mo. 
Robt.  Feickert,  St.  Louis,  Mo. 

Trans-Mississippi  Commercial  Congress — 
R.  C.  Kerens,  St.  Louis,  Mo. 
H.  R.  Whitraore,  St.  Louis,  Mo. 

Travelers'  Protective  Association  of  America — 

W.  A.  Kirchhoff,  St.  Louis,  Mo. 
Louis  Rosen,  St.  Louis,  Mo. 
W.  X.  McConkin,  St.  Louis,  Mo. 
W.  R.  Johnson,  Knoxville,  Tenn. 
J.  C.  Simering,  Baltimore,  Md. 
Jerry  Porter,  Chnton,  Ky. 
Horace  C.  Starr,  Indianapolis,  Ind. 
Louis  T.  La  Beaume,  St.  Louis,  Mo. 

Western  Fruit  Jobbers'  Association — 
H.  J.  Streiglit,  Omaha,  Neb. 

Winter  Wheat  Millers'  League — 

M.  S.  Bhsh,  Seymour,  Ind. 
M.  H.  Davis,  Shelby,  0. 

Wholesale  Saddlery  Association  of  the  United  States 

John  B.  Denvir,  St.  Louis,  Mo. 
Louis  Ploesser,  St.  Louis,  Mo 


State  and  Local  Organizations. 


ALABAMA. 

Birmingham  Board  of  Trade — 
J.  A.  Van  Hoose. 

Huntsville  Wholesale  Grocers'  Association — 

R.  E.  Pettus,  Huntsville,  Ala. 

ARKANSAS. 

Fort  Smith  Traffic  Bureau — 

J.  E.  Hundley,  Ft.  Smith,  Ark. 

Gentry  Fruit  Growers'  Association — 
G.  R.  Maxon,  Gentry,  Ark. 

Judsonia  Fruit  &  Vegetable  Growers'  Association- 

L.  M.  Pyles,  Judsonia,  Ark. 
H.  J.  Winn   Judsonia   Ark. 

Little  Rock  Board  of  Trade,  and 

Little  Rock  Merchants'  Freight  Bvureau — 

A.  R.  Bragg,  Little  Rock,  Ark. 

Jas.  J.  Mandlebaum,  Little  Rock,  Ark. 

Texarkana  Commercial  Club — 

J.  L.  Turner,  Texarkana,  Ark. 


30 

Texarkana  Freight  Bureau.'and 
Texarkana  Wholesale  Grocers'  Ass'n — 
R.  L.  Spencer,  Texarkana,  Ark. 

CALIFORNIA. 
State  Delegates— 

H.  1>.  Loveland,  San  Francisco,  Cal. 
C.  B.  Boothe,  Los  Angeles,  Cal. 
Frank  Wiggins,  Los  Angeles,  Cal. 
W.  H.  Weilbye,  Oakland,  Cal. 
J.  A.  Filcher,  San  Franci.-co,  Cal. 
A.  C.  Rulofson,  San  Francisco,  Cal 

California  State  Board  of  Trade,  and 
California  Manufacturers'  &  Producers'  Association  - 
H.  D.  Loveland,  San  Francisco,  Cal. 

Highland  Orange  Growers'  Association — 
Seth  Marshall,  San  Bernardino,  Cal. 

Humboldt  County  Chamber  of  Commerce — 

J.  G.  Loreren,  Eureka,  Cal. 

Los  Angeles  Chamber  of  Commerce — 
Frank  Wiggins,  Los  Angeles,  Cal. 
F.  W.  King,  Lo.  Angeles,  Cal. 

Oakland  Board  of  Trade— 

A.  V.   Feight,  Oakland,  Cal. 
W.  H.  Taylor,  Oakland,  Cal. 

Oakland  Merchants'  Exchange — 

W.  H.  Weilbye,  Oakland,  Cal. 

Sacramento  Board  of  Trade— 

J.  G.  Martine,  Sacramento,  Cal. 
J.  H.  Devine,  Sacramento,  Cal. 

Sacramento  Chamber  of  Commerce — 
J.  G.  Martine,  Sacramento,  Cal 
J.  H.  Devine,  Sacramento,  Cal. 

San  Bernardino  Board  of  Trade — 

Seth  Marshall,  San  Bernardino,  Cal. 

San  Diego  Chamber  of  Commerce — 
Ed.  Fletcher,  San  Diego,  Cal. 

San  Francisco  Chamber  of  Commerce,  and     . 
San  Francisco  Merchants'  Exchange— 

H.  D.  Loveland,  San  Francisco,  Cal 

COLORADO. 

Colorado  State  Realty  Association — 
Geo.  J.  Kindel,  Denver,  Colo. 
Fred  H.  Coe,  Denver,  Colo. 

Denver  Real  Estate  Exchange,  and 
Denver  Chamber  of  Commerce  and  Commercial  Club- 
Geo.  J.  Kindel,  Denver,  Colo. 


31 


CONNECTICUT. 

Connecticut  State  Grange,  P.  of  H. — 

O.  8.  Wood,  Ellington,  Coim. 

GEORGIA. 

Georgia  Interstate  Saw  Mill  Association — 

H.  H.  Tift,  Tifton,  Ga. 
^Wm.  B.  Stillwell,  Savannah,  Ga. 

Atlanta  Chamber  of  Commerce — 

Robt.  F.  Maddox,  Atlanta,  Ga. 

Atlanta  Freight  Bureau — 

W.  E.^Newill,  Atlanta,  Ga. 

■  IDAHO. 

Idaho  Lumber  Dealers'  Association — 
W.  R.  Kivett,  Boise,  Idaho. 

[ILLINOIS. 

Illinois  Millers'  State  Association — 

E.  C.  Kreider,  Jacksonville,  111. 
H.  B.  Sparks,  Alton,  111. 

Illinois  State  Grange,  P.  of  H. — 

G.  R.  Tate,  Belleville.  111. 
W.  J.  Miller,  Belleville,  111. 

D.  Q.  Trotter,  Jerseyville,  111. 

lllinoisJTravelers'  Protective  Association— 
M.  H.  Seed.  Danville,  III. 
Thad.  P.  Howe,  Chicago,  111. 

Southern  Illinois  Millers'  Association — 

J.  L.  Grigg,  Sparta,  111. 
A.  J.  Meek,  Marissa,  111. 

Anna  Fruit  Growers' 'Association — 

E.  G.  Davies,  Chicago,  111, 

Cairo  Board  of  Trade— 

H    E.  Halhday,  Cairo,  lU. 

Chicago  Board  of  Trade — 

John  T.  Sickel,  Chicago,  111. 
R.  S.  Lyon,  Chicago,  III 
Richard  GambriU,  Chicago,  III. 

Quincy  Freight  Bureau — 

L.  B.  Boswell,  Quincy,  111. 

Rockford  Grocers'  Association — 

J.  E.  Broadie,  Rockford,  111. 
Wm.  Lawton,  Rockford,  111. 


32 


INDIANA. 

Indiana  Grain  Dealers'  Association — 
C.  B.  Kiley,  Indianapolis,  Ind. 

Indiana  Millers'  State  Association — 

C.  J.  Pickering,  Middletown,  Ind. 

Indiana  Shippers'  Association,  and 
Shippers'  Protective  League  of  Indiana — 

D.  T.  Bacon,  Indianapolis,  Ind. 

Travelers'  Protective  Association  of  Indiana — 

R.  M.  Millican,  Evansville,  Ind. 
L.  P.  Colenbaugh,  Vincennes,  Ind. 
Jas.  R.  Crawford,  New  Albany,  Ind. 
H.  M.  Campbell,  Columbus,  Ind. 

E.  A.  Kiefner,  Terre  Haute,  Ind. 
Harmon  Meyer,  Richmond,  Ind. 
Riley  Hunt,  Indianapolis,  Ind. 
J.  G.  Thomas,  Muncie,  Ind. 

D.  A.  Coulter,  Frankfort,  Ind. 
C.  G.  Yelm,  La  Fayette,  Ind. 
Andrew  Jackson,  Marion,  Ind. 
Chas.  Falk,  Ft.  Wayne,  Ind. 
L.  P.  Hardy,  South  Bend,  Ind. 
W.  H.  Wiley,  Marion,  Ind. 

Fort  Wayne  Commercial  Club,  and 
Fort  Wayne  Merchants'  Exchange — 

Theo.  F.  Thieme,  Ft.  Wayne,  Ind. 

Indianapolis  Board  of  Trade — 

Frank  M.  Murphy,  Indianapolis,  Ind. 

La  Fayette  Commercial  Club — 

C.  G.  Yelm,  La  Fayette,  Ind. 

Lafayette  Merchants'  Association — 
Edgar  C.  Collins,  Lafayette,  Ind. 

IOWA. 

Corn  Belt  Meat  Producers'  Association  of  Iowa — 

G.  W.  Maher,  Ft.  Dodge,  Iowa. 
Frederic  Larrabee,  Ft.  Dodge,  Iowa. 

Iowa  Grain  Dealers'  Association — 

Geo.  A.  Wells,';^Des  Moines,  Iowa. 

Iowa  State  Manufacturers'  Association — 

A.  C.  Hutchins,  Des  Moines,  Iowa. 
W.  W.  Marsh,  Waterloo,  Iowa. 

Cedar  Rapids  Commercial  Club — 

A.  N.  Palmer,  Cedar  Rapids,  Iowa. 

Chariton,  Noxall  Club — 

Walter  C.  Gookin,  Chariton,  Iowa. 


33 

Des  Moines  Commercial  Exchange — 
A.  C.  Hutchins. 

Dubuque  Shippers'  Association — 

W.  B.  Martin,  Dubuque,  low 

Oskaloosa  Commercial  Club— 

Chas.  Huber,  Oskaloosa,  Iowa. 

KANSAS. 

Kansas  Federation  of  Commercial  Interests  — 

Harry  McMillan,  Minneapolis,  Kas. 
M.  AI.  Sherman,  Geneseo,  Kas. 
J.  E.  Howard,  Wichita,  Kas. 
H.  O.  Bradley,  Clyde,  Kan. 
H.  L.  Resing,  Wichita,  Kan. 

Kansas  Grain  Dealers'  Association — 
L.  Cbrtelyou,  Muscotah,  Kas. 

Southern  Kansas  Millers'  Commercial  Club 
F.  D.  Stevens,  Wichita,  Kan. 

Arkansas  City  Commercial  Club — 

A.  L.  Newman,  Arkansas  City,  Kas. 

Emporia  Business  Men's  Association — 

J.  E.  Evans,  Emporia,  Kas. 

Russell  Commercial  Club — 

M.  K.  Brundage,  Russell,  Kas. 

Topeka  Commercial  Club — 

Jas.  A.  Troutman,  Topeka,  Kas. 

Wichita  Chamber  of  Commerce — 
J.  E.  Howard,  Wichita,  Kas. 

Wichita  Commercial  Club — 

J.  H.  Turner,  Wichita,  Kas. 

Wichita  TrafiBc  Bureau — 

H.  L.  Resing,  Wichita,  Kat, 

KENTUCKY. 

Travelers'  Protective  Association  of  Kentucky- 
Chas.  P.  Frick,  Louisville,  Ky. 

Louisville  Lumbermen's  Club — 

C.  H.  Callahan,  Louisville,  Ky. 

LOUISIANA 

Louisiana  Ponchatoula  Farmers'  Association — 
Wm.  S.  Keaghey. 


34 


MASSACHUSETTS 

Boston  Fruit  &  Produce  Exchange — 
Geo.  F.  Mead,  Boston,  Mass. 

Lowell  Board  of  Trade — 

J.  L.  Chalifoux,  Lowell,  Mass. 

MICHIGAN. 

Michigan  Hay  Association — 

Greo.  C.  Warren,  Saginaw,  Mich. 

Michigan  State  Millers'  Association, 

Harry  E.  Hooker,  Lansing,  Mich. 

Grand  Rapids  Board  of  Trade — 

W.  N.  Rowe,  Grand  Rapids,  Mich. 
Geo.  A.  Davis,  Grand  Rapids,  Mich. 
Geo.  G.   Whitworth,  Grand  Rapids,  Mich. 
H.  D.  C.  VanAsraus,  Grand  Rapids,  Mich. 
Abraham   May,  Grand   Rapids,   Mich. 

MINNESOTA. 

Minnesota  Millers'  Club — 

L.  H.  Pinney,  Minneapolis,  Minn. 

Duluth  Board  of  Trade— 

Geo.  F.  Piper,  Minneapolis,  Minn. 

Duluth  Branch  of  L.  S.  Meat  Dealers'  Association- 
A.  J.   Milner,  Duluth,  Minn. 

Duluth  Commercial  Club — 

E.   M.   Ferguson,   Duluth,   Minn. 
R.  S.  Powell,  Duluth,  Minn. 

Duluth  Produce  &  Fruit  Exchange^ 
E.  M.  Ferguson,  Duluth,  Minn. 

Duluth  Retail  Grocers'  Association- 
Simon  Clark,  Duluth,  Minn. 

Minneapolis  Chamber  of  Commerce — 

G.  F.  Piper,  Minneapolis,  Minn. 
G.  D.  Rogers,  Minneapolis,  Minn. 

Minneapolis  Millers'  Club — 

C.  C.  Bovey,  Minneapohs,  Minn. 

Red  River  Millers'  Club — 

E.  Van  Houten,  Moorhead,  Minn. 

St.  Paul  Chamber  of  Commerce  — 

R.  A.   Kirk,  St.  Paul,  Minn. 

Gen.  M.  D.  Flower,  St.  Paul,  Minn. 

South  St.  Paul  Live  Stock  Exchange — 

H.  B.  Carroll,  South  St.  Paul,  Minn. 


35 


MISSISSIPPI. 

Natchez  Cotton  &  Merchants'  Exchange — 
J.  W.  Roos,  Natches,  Miss. 

MISSOURI. 

Missouri  Retail  Stove  &  Hardware  Dealers'  Association 
J.  W.  Poland,  Carrollton,  Mo. 

Missouri  Retail  Merchants'  Association — 

John  H.  Gundlach,  St.  Loui.s,  Mo. 
R.  R.  Mclntyre,  Hannibal,  Mo. 
Robert  E.  Lee,  St.  Louis,  Mo. 
Chas.  F.  Busche,  St.  Louis,  Mo. 
Lorenz  F.  Padberg,  St.  Louis,  Mo. 
W.  E.  Sullivan,  St.  Joseph,  Mo. 
James  Clausen,  St.  Louis,  Mo. 
Geo.  A.  Bond,  Kansas  City,  Mo. 
Fred.  Busche,  St.  Louis,  Mo. 

Travelers'  Protective  Association  of  Missouri  — 

Richard  Hanlon. 

J.  H.  Barsachs. 

W.  P.  Moss. 

H.  M   Schissler. 

J.  H.  Stafford. 

F.  H.  Blank enmeister. 

F.  Herkert. 

H.  W.  Belding. 

F.  W.  Crandall. 

Gashland  Fruit  Growers'  Association — 
W.  T.  Wilhams,  Gashland,  Mo. 

Kansas  City  Board  of  Trade — 

J.  E.  Seaver,  I-Cansas  City,  Mo. 

Peirce  City  Fruit  Growers'  Association — 
R.  F.  George,  Peirce  City,  Mo. 

St.  Joseph  Commercial  Club — 

F.  W.  Maxwell,  St  Joseph,  Mo. 

St.  Louis  Business  Men's  League — 

Harvey  L.  Christie,  St.  Louis,  Mo. 

Elias  Michael,  St.  Louis,  Mo. 

W.  K.  Kavanaugh,  St.  Louis,  Mo. 

St.  Louis  Cotton  Exchange — 

L.  L.  Prince,  St.  Louis,  Mo. 

St.  Louis  Fruit  &  Produce  Exchange — 

F.  W.  Brockman,  St.  Louis,  Mo. 
Wm.  G.  Mueller,  St.  Louis,  Mo. 
L.  Garvey,  St.  Louis,  Mo. 

St.^Louis  Manufacturers'  Association — 

H.  F.  Vogel.  St.  Louis,  Mo. 
E.  S.  Ware,  St.  Louis,  Mo. 


36 


St.  Lotiis  Merchants'  Exchange— 

E.  0.  Standard,  St.  Louis,  Mo. 

C.  H.  Seybt,  St.  Louis,  Mo. 

O.  L.  Teichmann,  St.  Louis,  Mo. 

W.  P.  Kennett,  St.  Louis,  Mo. 

H.  F.  Langenberg,  St.  Louis,  Mo. 

E.  S.  Tompkins,  St.  Louis,  Mo.  | 

W.  H.  Danforth,  St.  Louis,  Mo. 

St.  Louis  Stove  Manufacturers'  Association — 

E.  S.  Ware,  St.  Louis,  Mo. 

NEW  YORK. 

New  York  State  Fruit  Growers'  Association — 

J.  G.  Patterson,  Sheridan,  N.  Y. 

Buffalo  Lumber  Exchange — 

F.  W.  Vetter,  Buffalo,  N.  Y. 

New  York  Manufacturers'  Association — 

Jas.  T.  Hoile,  Brooklyn,  N.  Y. 
Geo.  T.  Moon,  Brooklyn,  N.  Y. 

Rochester  Chamber  of  Commerce — 

Thos.  B.  Dunn,  Rochester,  N.  Y. 
J.  M.  Ives,  Rochester,  N.  Y. 

Utica  Chamber  of  Commerce — 

Oscar  F.   Foster,  Utica,  N.  Y. 
Edmund  L.  Munson,  Utica,  N.  Y. 

OHIO. 

Ohio  Grain  Dealers'  Association — 
C.  B.  Jenkins,  Marion,  0. 

Ohio  State  Millers'  Association — 

C.  B.  Jenkins,  Marion,  0. 
John  W.  Burk,  Springfield,  0. 

Cincinnati  Chamber  of  Commerce — 

B.  W.  Campbell,  Cincinnati,  0. 

Cincinnati  Receivers  &  Shippers'  Association— 
E.  E.  Williamson,  Cincinnati,  0. 

Toledo  Produce  Exchange — 

W.  H.  Morehouse,  Toledo,  0. 

Youngstown  Builders'  Exchange — 

Edward  Walton,  Youngstown,  Mo. 

OKLAHOMA. 

Oklahoma  Live  Stock  Association — 

W.  E.  Bolton,  Woodward,  Oklahoma. 

Oklahoma  Millers'  Association — 

Geo.  G.  Sohlberg,  Oklahoma  City,  Okla. 


37 


Oklahoma  TrafiBc  Association — 

J.  II.  Johnston,  Oklahoma  City,  Okla. 

OREGON. 

Oregon  Live  Stock  Breeders'  Association — 
W.  H    Wehruug,  Hillsboro.  Ore. 
Frank  Williams,  Portland,  Ore. 
Jefferson  Mvers,  Portland,  Ore. 
Gilbert  Scott,  Milwaukee,  Ore. 
Layton  Wisdom,  Portland,  Ore. 
J.  P.  Marshall,  Portland,  Ore. 

Portland  Board  of  Trade — 

Hon.  C.  W.  Nottingham,  Portland,  Ore. 
A.  F.  Biles,  Portland,  Ore. 
F.  E.  Beach,  Portland,  Ore. 

Portland  Chamber  of  Commerce — 

C.  H.  Mclsaac,  Portland,  Ore. 

PENNSYLVANIA  ' 

Philadelphia  Commercial  Museums — 
W.  P.  Wilson,  Philadelphia,  Pa. 

Hardware  Merchants'  &  Manufacturers'  Association 
Hugh  McCaffrey,  Philadelphia,  Pa. 

Philadelphia  Trades  League — 

N.  B.  Kelly,  Philadelphia,  Pa. 
Dr.  Wilson,  Philadelphia,  Pa. 

Pittsburgh  Chamber  of  Commerce — 

A.  P.  Burch6eld,  Pittsburgh,  Pa. 

Scranton  Board  of  Trade — 

J.  A.  Lansing,  Scranton,  Pa. 

SOUTH  CAROLINA. 

Charleston  Bureau  of  Freight  &  Transportation — 
H.  R.  Jackson,  Charleston,  S.  C. 

TENNESSEE. 

White  County  Live  Stock  Association — 
J.  F.  Wilhoite,  Sparta,  Tenn. 
J.  O.  Snodgrass,  Sparta,  Tenn. 

TEXAS. 

Texas  Cattle  Raisers'  Association — 

John  T.  Lytle,  Ft.  Worth,  Tex 

J.  H.  P.  Da\'is,  Richmond,  Texas. 

I.  T.  Pryor,  San  Antonio,  Tex. 

M.  B.  Pulliam,  vSan  Angelo,  Tex. 

Dr.  E.  B.  Frazier,  Vinita,  I.  T. 

John  N.  Simpson,  Dallas,  Texas.  » 

L.  J.  Wortham,  Dallas,  Texas. 


38 

Texas  Grain  Dealers'  Association — 

H.  B.  Dorsey,  Weatherford,  Texas. 
J.  Z.  Keel,  Gainesville,  Texas. 

Texas  Millers'  Association — 

Frank  Kell,  Wichita  Falls,  Texas. 

Dallas  Commercial  Club — 

John  V.  Hughes,  Dallas,  Texas. 

WISCONSIN, 

Wisconsin  Cheesemakers'  Association — 
.].  K.  Powell,  Milwaukee,  Wis. 
Math.  Michels,  Garnet,  Wis. 

Wisconsin  State  Millers'  Association — 
E.  J.  Lachmann,  Neenah,  Wis. 

Milwaukee   Chamber  of  Commerce — 

Geo.  A.  Schroeder,  Milwaukee,  Wis. 
Wallace  M.  Bell,  Milwaukee,  Wis. 

Milwaukee  Merchants'  &  Manufacturers'  Association — 
Walter  Read,  Milwaukee,  Wis. 
James  S.  Church,  Milwaukee,  Wis. 
E.  P.  Bacon-,  Milwaukee,  Wis. 

Muscoda  Dairy  Board  of  Trade — 

H.  E.  Austin,  Boscobel,  Wis. 
A.  C.  V.  Elston,  Muscoda,  Wis.' 

Superior  Retail  Grocers'  Protective  Association — 
A.  L.  Schlappi,  Superior,  Wis. 
A.  Y.  Hock,  Superior,  Wis. 
Fred  York,  Superior,  Wis. 

WYOMING. 

Saratoga  Board  of  Trade — 

C.  P.  Qemmons,  Saratoga,  Wyo. 

Comprising  306  delegates  from  169  Associations,  32  of  which 
are  national  and  sectional  (the  latter  comprising  groups  of 
States)  and  137  State  and  local  in  character,  located  in  28  States 
and  Territories. 

For  the  Committee :   N.  B.  Kelly, 

Chairman. 

The  report  was  adopted. 


39 

The  Committee  on  Rules  submitted  the  following  report: 

To  the  Interstate  Commerce  Law  Convention. 

Gkntlemkn:  Your  Committee  on  Mules  be^s  leave  to  report 
that  we  recommend  the  adoption  of  the  following: 

Rules  for  the  Convention. 

1.  In  case  a  division  shall  be  called  for,  bj'two  or  more  dele- 
gates, on  any  question,  any  delegate  duly  authorized  to  represent 
more  than  one  organization  shall  be  entitled  to  cast  the  vote  for 
each  organization  so  re|)resented  by  him. 

2.  In  case  any  organization  shall  have  a  larger  number  of 
delegates  present  than  it  is  entitled  to  by  the  terms  of  the  call 
for  tliis  Convention,  the  majority  of  such  delegation  may  cast 
the  number  of  votes  to  which  the  organization  is  entitled  by  the 
terms  of  the  call. 

3.  In  other  cases  than  those  above  mentioned,  each  delegate 
shall  be  entitled  to  one  vote  upon  all  questions  before  the  Con- 
vention. 

4.  Roberts'  "  Rules  of  Order  "  shall  be  the  guide  in  determin- 
ing questions  of  parliamentary  practice. 

For  the  Committee :    C.  H.  Seybt, 

Chairman. 

The  report  of  the  committee  and  rules  contained  therein  were 
adopted. 

The  Committee  on  Finance  then  submitted  the  following 
report : 

To  the  Interstate  Commerce  Law  Convention. 

Gentlemen  :  Your  Committee  on  Finance  begs  leave  to  re- 
port, that  upon  careful  consideration  of  the  question  of  raising 
a  sufficient  fund  to  continue  the  work  of  this  Convention  during 
the  approaching  session  of  Congress,  we  deem  it  necessary  to 
obtain  from  the  membership  a  sum  equal  to,  at  least  $6,000, 
and  to  that  end  we  recommend  the  adoption  of  the  following 
resolutions : 

Resolved,  That  each  of  the  delegates  present  at  thiS  Conven- 
tion be  requested  to  announce  the  amount  of  money  which  he 
will  undertake  to  raise  from  the  organization  represented  by  him, 
toward  the  expenses  which  will  be  incurred  by  the  Executive 
Committee  appointed  by  this  Convention,  in  prosecuting  the 
work  of  securing  the  desired  legislation,  either  by  appro[)riation 
or  individual  sul:)Scriptions,  and  that  the  delegates  not  present  be 
requested  to  communicate  with  the  Secretary,  by  (?orres{)on(lence, 
to  the  same  effect.     And  be  it  further 


40 

Resolved,  That  the  State  representatives  of  the  Executive  Com- 
mittee be  requested  to  give  their  active  co-operation  in  the  work 
of  raising  needed  funds. 

For  the  Committee:  J.  E.  Howard, 

ChaiJ'man. 

The  report  of  the  committee  was  debated  at  some  length 
The  resolution  I'ecommended  therein  was  amended,  by  motion 
of  Mr.  F.  E.  Andrews,  of  Sterling,  Illinois,  representing  the 
National  Farmers'  Exchange,  so  that  the  amount  of  the  fund  to 
be  raised  should  read  $10,000,  instead  of  $6,000,  and  the  report 
and  resolution  were  then  unanimously  adopted. 

A  roll-call  was  ordered,  so  that  delegates  might  announce,  in 
turn,  the  amount  which  each  would  pledge,  as  a  contribution 
toward  the  fund  to  be  raised. 

The  following  subscriptions  were  recorded  : 

American  Short-Horn  Breeders'  Association $100 

Cattle  Growers'  Interstate  Executive  Committee. .."....  100 

Central  Yellow  Pine  Association   500 

Millers'  National  Association  of  the  United  States 100 

Millers'  National  Federation 100 

National  Farmers'  Exchange   ....  100 

National  League  of  Commission  Merchants 100 

National  Retail  Grocers'  Association 50 

National  Live  Stock  Association ' 100 

National  Lumber  Manufacturers'  Association 25 

National  Wholesale  Lumber  Dealers'  Association 100 

Southern  Hardware  Jobbers'  Association ...  -50 

Southwestern  Lumbertnen's  Association 100 

Western  Fruit  .Jobbers'  Association 50 

Wholesale  Saddlery  Association  of  the  United  States. . .  50 

Fort  Smitli  Traffic  Bureau 100 

Judsonia  Fruit  and  Vegetable  Growers' Association.  .. .  10 

Little  Rock  Board  of  Trade 125 

Texarkana  Freight  Bureau  and  Wholesale  Grocers'  Asso- 
ciation   ■ 25 

Highland  Orange  Growers'  Association 25 

Los  Angeles  Chamber  of  Commerce 50 

Oakland  Merchants'  Exchange 50 

San  Bernardino  Board  of  Trade 100 

Colorado  State  Realt_y  Association   100 

Denver  Chamber  of  Commerce 25 

, Connecticut  State  Grange,  Patrons  of  Husbandry 25 

Georgia  Interstate  Saw  Mill  Association 25 

Anna  Fruit  Growers'  Association 25 

Cliicago  Board  of  Trade 100 

Illinois  State  Millers'  Association 100 


41 

Quinc}'  Freight  Bureau .  $25 

Fort  \\'ayne  Comiuercial  Clul> 25 

Fort  Wayne  Mercliants'  Exchange 25 

Indiana  Grain  Dealers'  Association 25 

La  Fayette  Coniniercial  C!lub 25 

Shippers'  Protective  League  of  Indiana 50 

Travelers'  Protective  Association  of  Indiana 100 

Des  jMoines  Commercial  Exciiange 50 

Iowa  Grain  Dealers'  Association 50 

Emporia  Business  Men's  Association 25 

Kansas  Federation  of  Commercial  Interests 100 

Southern  Kansas  Millers'  Commercial  Club 100 

Topeka  Commercial  Club 25 

Wichita  Chamber  of  Commerce 50 

Wichita  Commercial  Club 25 

Louisville  Lumbermen's  Club 50 

Boston  Fruit  and  Produce  Exchange 50 

Grand  Uapids  Board  of  Trade 50 

Duluth  Branch  of  L.  S.  Meat  Dealers'  Association 25 

Duluth  Commercial  Club   100 

Duluth  Fruit  and  Produce  Exchange 25 

Duluth  Retail  Grocers'  Association 50 

Minneapolis  Chamber  of  Commerce 100 

Natchez  Cotton  and  Merchants'  Exchange 25 

St.  Louis  Merchants'  Exchange 200 

Rochester  Chamber  of  Commerce 100 

Utica  Chamber  of  Commerce 50 

Cincinnati  Receivers  and  Shippers'  Association 50 

Youngstov/n  Builders'  Exchange , 25 

Pitts])urg  Chamber  of  Commerce 100 

Texas  Cattle  Raisers'  Association ; 100 

Texas  Millers'  Association 100 

Texas  Grain  Dealers'  Association 50 

Milwaukee  Chamber  of  Commerce 100 

Milwaukee  Merchants  and  Manufacturers' Association. .  lOO 

Wisconsin  Cheese  Makers'  Association 25 

Superior  Retail  Grocers'  Association 25 

Total : . .   $4,710 


Judge  S.  H.  Cowan,  of  Fort  Worth,  Texas,  was  introduced,  and 
addressed  the  Convention  as  follows: 

Addrkss  of  Judge  S.  H.  Cowan. 

Mr.  Chairman  and  Gentlemen  of  the  Convention : 

For  four  years  we  have  labored  incessantly,  to  the  best  of  our 
ability,  with  the  limited  means  at  our  hands,  to  have  the  Act  to 


•42 

Regulate  Commerce  so  amended  as  to  afford  a  speed}'-,  ade- 
quate, and  inexi)ensive  remedy  against  unreasonable,  unjust, 
and  discriminatory  rates  of  freight.  We  have  not  succeeded,  but 
have  made  much  progress.  Conditions  existing  four  years  ago 
brought  us  togetlier.  If  they  were  such  as  to  then  arrest  our 
attention,  how  much  more  are  they  so  toda3\  I  shall  give  some 
reasons  which  I  think  make  it  imperative  that  relief  be  obtained, 
which,  in  my  opinion,  should  arrest  the  attention  of  all  thought- 
ful and  patriotic  citizens. 

Advances  in  freight  rates  have  furnished  the  evidence  of  the 
power  of  the  railroads  over  the  commerce  of  the  country  to 
bring  it  home  to  us  that  we  are  completely  in  their  grasp,  and 
the  question  is:  Shall  that  power  longer  go  unrestrained  ?  That 
it  is  desirable  to  tlie  public  that'  there  be  a  limit  placed  upon 
railway  rates  and  earnings,  no  one  will  question,  except  those 
who  get  the  money,  and  no  one  should  expect  that  they  desire 
it;  nor  need  it  l)e  expected  that  the  rates,  so  long  as  they  go 
unrestrained,  will  be  made  in  the  interest  of  the  public,  except 
where  it  subserves  the  railroads'  interest.  Whatever  they  may 
sa}'  about  it,  railwa}'  men  treat  railway  property  like  any  other 
species  of  property,  and  claim  the  right  to  earn  all  they  can, 
denying  the  right  of  the  public  to  limit  their  earnings.  Theo- 
retically they  are  bound  to  admit  the  right  of  public  regulation, 
but  practically^  they  resist  every  attempt  to  do  it.  The  argu- 
ments which  they  advance  against  any  remedy  which  the  law 
seeks  to  give  leads  ultimately  to  the  conclusion  that  no  regula- 
tion which  is  effective  should  be  enacted.  They  are  organized, 
have  command  of  unlimited  money  and  favors,  so  that  through- 
out the  country  railway  officials,  agents,  employees,  attorneys, 
friends,  who  are  recipients  of  favors  ;  magazine  writers,  news- 
papers, politicians,  who  ride  free;  Congressmen,  Senators,  and 
favored  persons  generally  are  showering  upon  the  public  their 
arguments  to  justify  every  sort  of  abuse  which  happens  to  exist 
in  matters  pertaining  to  transportation,  as  well  as  their  argu- 
ments against  any  sort  of  regulation.  One  will  assert  that  the 
people  have  lower  rates  and  better  service  where  there  is  no 
regulation,  while  another  will  declare  that  to  grant  a  remedy  to 
shippers  against  unreasonable  or  unjust  rates  would  speedily 
bankrupt  the  railroads. 

One  will  assert  that  rates  have  not,  in  fact,  been  advanced, 
while  another  will  declare  that  the  advances  were  justified,  in 
order  that  the  railways  might  i)articii)ate  in  the  general  pros- 
perity of  the  country,  while  another  will  claim  that  the  rates 
were  previously  too  low.  If  the  ship])er  of  merchandise  tells 
them  that  since  the,y  handle  much  heavier  trains  and  carloads 
they  can  haul  cheaper,  they  deny  that  this  is  an  economy  and 
say  that  the  lighter  car  and  train  loading  and  more  frequent 
use  of  equipment  was  more  economical.  On  the  other  hand, 
to  the  live-stock  shipper  they  say  that  rates  must   be  made 


43 

higher  because  of  light  car  and  train  loading;  so  they  catch 
you  going  and  coining. 

Scarcely  a  fact  in  connection  with  their  operation  and  earn- 
ings can  be  asserted  l)y  the  shipper  in  l)ehalf  of  a  reduction  in 
rates  which  will  not  be  strenuously  denied  or  by  ingenuity  ex- 
plained away.  No  theory,  however  absurd,  can  be  suggested 
in  support  of  increased  rates  which  the}^  will  not  maintain  with 
vehemence.  For  example,  they  have  published  the  contention 
that  what  they  call  a  unit  of  value  of  commodity  will  buy  more 
of  the  so-called  commodity — transportation — than  the  same 
unit  of  commodities  would  buy  when  prices  were  lower,  and 
upon  that  basis  found  the  contention  that  rates  have  not  ad- 
vanced, ignoring  the  fact  that  the  gold  dollar  is  the  standard  of 
value.  In  this  argument  the}'  undertake  to  average  the  price 
of  grain  with  lumber,  and  coal  with  iron,  and  cotton  with  live 
stock,  and  all  commodities  with  all  others;  then,  on  the  whole, 
to  tell  you  that  because  the  average  price  of  all  commodities 
is  higher  than  formerly,  the  rates  of  freight  should  be  higher, 
leaving  out  the  important  fact  that  many  products  are  low. 

If  3'ou  call  their  attention  to  the  fact  that  cattle  are  very  cheap, 
they  will  at  once  tell  3'ou  that  you  cannot  expect  rates  to  fluctuate 
with  prices;  that  rates  should  be  stable,  yet  when  they  seek  to 
justify  an  advance  on  merchandise,  they  insist  that  as  the  value 
of  commodities  increase,  advances  in  rates  are  justified.  They 
have  a  i)et  phrase  that  they  are  "  entitled  to  participate  in  the 
general  prosperity."  Whose  prosperity  ?  They  assume  that 
everybody  is  prosperous  because  of  high  prices,  and  their  arjiu- 
ment  leads  to  the  conclusion  that  they  will  add  to  that  prosperity 
by  advancing  rates  so  as  to  make  prices  still  higher — so  as  to  form 
the  basis  of  another  advance,  and  thus  continue  the  prosi)erity 
If  you  say  the  consumer  pays  the  freight  and  he  cannot  afford 
to  have  a  high  rate  of  freight  added  to  the  high  price  of  what 
he  buys,  they  will  tell  you  the  consumer  makes  more  money 
than  when  prices  and  rates  were  lower.  What  consumer?  It 
is  not  so  with  the  cattle  industry  ;  and  the  same  may  be  said 
as  to  many  others.  Indeed,  there  are  many  lines  of  business 
in  which  expenses,  by  reason  of  high  prices  of  supplies  and 
labor,  has  reduced  the  profits  to  a  minimum  or  destroyed  them 
altogether;  so  that  one  of  the  very  grounds  upon  which  the 
railroads  claim  the  right  to  advance  rates  in  order  to  participate 
in  the  general  prosperity,  so  called,  namelj',  high  })rices,  has 
been  the  cause  of  many  lines  of  business  becoming  unprofitable. 
Thus  it  is  demonstrated  that  the  theory  is  a  mere  em[)ty,  time- 
serving subterfuge,  and  that  instead  of  partici [mating  in  such 
supposed  prosperity,  the  railroads  are  but  adding  to  the  adver- 
sity. This  must  of  necessity  be  the  result  of  carrying  out  the 
theory  that  the  railroads  are  entitled  to  advance  rates  in  order 
to  i)articipate  in  prosperity,  by  assuming  that  high  prices  bring 
prosperity.     It  may  do  so  to  him  who  sells,  but  the  buyer  is 


44 

quite  as  much  a  party  at  interest.  As  an  example,  a  short  crop 
of  cotton  for  two  3'ears  has  advanced  the  price,  yet  the  farmers 
were  less  prosperous,  particularly  in  the  district  where  the  boll 
weevil  destroj^ed  the  cotton.  Does  that  fact  justifj'  a  higher 
rate  of  freight?  The  railroads  might  say  to  the  steel  and  wire 
trust,  "  Seeing  your  prosperity,  we  wish  to  participate  in  it ;  hence 
will  raise  the  rate  of  freight  on  wire."  To  which  the  trust  re- 
plies: "  It  makes  no  difference  to  us  ;  we  sell  it  f.  o.  b."  So  in 
that  case,  the  Western  stock-raiser  who  is  struggling  against  low 
prices  of  cattle  must  pay  the  freight  on  his  wire  to  enable  the 
railroad  to  participate  in  the  trust'js  prosperit3^ 

Whether  these  things  actually  happened  or  not,  it  is  clear  that 
the}''  would  so  occur  in  carrying  into  effect  such  a  theory  ;  hence 
I  say  that  rates  of  freight  cannot  be  measured  by,or  fluctuate  with 
the  price  current.  It  may  be  true  tliat  in  the  relation  of  rates  as 
between  classes  and  commodities  the  one  should  be  higher  or 
lower  because  of  the  fact  that  the  one  is  more  or  less  valuable, 
and  hence  more  able  to  do  so ;  but  to  make  the  rates  on  a  given 
commodity  fluctuate  with  its  price  is  quite  a  different  thing, 
and  particularly,  when  the  object  is  to  therebv  participate  in 
some  one's  supposed  prosperity,  when  the  chances  are  that  it 
results  in  adding  to  some  one's  adversity. 

Furthermore,  the  attempt  to  carr}'  out  such  a  theory  com- 
pletely ignores  the  matter  of  earnings.  The  mandate  of  the  law 
is  that  a  carrier  is  onlj'  entitled  to  earn  a  fair  return  on  the  fair 
value  of  the  property  employed  in  the  public  service,  and  must 
adjust  rates  accordingly.  The  law  gives  them  no  such  rights  a.s 
other  lines  of  business  have,  to  earn  all  they  may.  The}'  can  and 
do  parti pciate  in  the  country's  prosperity  b}'  the  increased  vol- 
ume of  l)usiness.  Individual  lines  of  road  ma}'  not  do  so,  because 
of  their  poor  location  or  because  of  too  many  roads  in  the  same 
territory,  but,  as  a  rule,  they  do.  This  method  is  automatic  and 
is  the  limit  of  the  right  to  participate  in  a  wave  of  prosperity  or 
share  in  adversity  ;  for  if  they  are  to  particijnite  in  the  one  they 
should  share  in  the  other  ;  but  in  neither  case  should  their 
schedules  of  rates  be  made  to  follow  price  currents,  which  may 
as  surely  indicate  adversity  as  prosperity.  y 

Rates  should  be  as  near  stable  as  conditions  will  permit; 
every  industry  should  know,  within  close  approximation,  what 
rates  of  freight  will  api)ly  to  it.  Stability  in  rates  is  next  in 
importance  to  stability  in  currency. 

The  circumstances  surrounding  us  would  seem  to  show  that 
rates  ought  to  be  reduced  instead  of  advanced.  Tlie  country 
has  developod  ;  tonnage  on  most  lines  has  doubled,  or  nearly 
so,  in  seven  years;  density  of  traffic,  freight  and  passenger,  has 
vastly  increased.  Such  economies  in  handling  it  have  been 
introduced  tliat  with  them  and  the  increase  in  traffic  it  can  be 
handled  much  cheaper.  True,  the  increase  in  tonnage  has 
been  greater  in  the  volume  of  low  grade  tonnage;  but  the  car 


45 

and  train  loading-  have  increased.  Real  operating  expenses 
have  not  proportionate)}'  advanced.  A  dollar's  worth  of  hihor 
and  a  dollar's  worth  of  coal  earns  more  than  it  did  when  both 
were  cheaj)er  i)er  day  or  per  ton. 

I  am  aware  of  tlie  fact  that  in  railway  accounts  they  have 
advanced  the  several  items  of  operating  expenses  so  that  the 
percentage  of  net  earnings  to  gross  are  shown  to  he  less  ti)an 
they  were  during  some  previous  years  on  some  roads;  hut  only 
on  a  few,  and  in  those  instances  either  there  was  not  the  usual 
increase  in  the  volume  of  business,  or  alniormal  expenditures 
were  matle  for  iietterments  and  charged  to  operating  expenses. 
The  latter  has  been  an  adopted  polic}'  wnth  most  of  our  great 
systems  during  tlie  last  four  years.  The  gross  earnings  have 
been  so  great  in  most  cases  that  if  only  the  normal  and  proper 
operating  expenses  had  been  deducted  the  net  earnings  would 
have  been  such  a  large  per  cent,  on  the  real  value  of  the  proper- 
ties as  to  startle  the  public. 

A  railroad's  earnings  ought  not  to  be  more  than  a  fair  return 
for  the  use  of  the  proi^erty,  to  be  tested  by  returns  on  perma- 
nent, fixed  investments  of  large  amounts  generall^^  The  public 
ought  not  to  have  to  pa}'  more  on  the  average  tlian  the  money 
invested  is  fairly  worth  if  otherwise  safely  invested. 

There  is  no  use  to  say  that  railroad  investment  is  not  safe. 
Investment  in  watered  stocks  and  bonds  may  not  be;  but  there 
can  be  no  doubt  that  practically  all  of  our  great  raih'oad  sys- 
tems pay  very  large  dividends  on  the  actual  money  wdiich  has 
been  })Ut  into  them — far  beyond  real-estate  investments  gener- 
ally;  and  they  would  pay  handsomely  on  such  valuation  upon 
far  less  rates  than  are  now  charged.  Did  you  ever  stop  to  think 
that  in  most  otlier  lines  of  business  there  is  a  lot  of  time  and 
thought  devoted  to  them  to  make  them  succeed,  for  which  no 
account  is  taken,  no  salary  paid,  yet  no  one  turns  his  head  or 
thought  toward  raih'oad  service  who  is  not  well  paid,  and  many 
who  do  the  least  are  i)aid  the  most,  all  of  Avhich  is  taken  out  of 
operating  expenses  or  fixed  charges  and  the  net  remains.  So 
the  net  earnings  are  real. 

The  Supreme  Court  of  the  United  States  has  stated  the  prin- 
cipal factors  to  be  considered  in  determining  reasonable  rates, 
and  that  the  basis  of  all  calculations  must  be  the  fair  value  of 
the  jn'operty.  Every  investigation  into  the  grounds  of  advances 
in  freight  rates  develo])s  that  in  none  of  the  cases  do  the  rail- 
roads })retend  to  limit  their  rates  or  earnings  to  what  the  Suprem  e 
Court  holds  to  be  their  proper  measure.  None  of  us  exjiect 
them  to  do  so  without  com|»ulsion,  but  ex|)ect  tliem  to  do  just 
what  they  ni  fact  do — make  all  they  can.  Regardless  of  whether 
in  i)oint  of  fact  they  do  succeed  in  taking  from  the  j)ul)lic  too 
much,  it  is  ])lain  they  may  do  so,  and  this  furnishes  an  all- 
sulficient  reason  why  this  great  power  should  be  limited,  re- 
strained, or  at  least  that  the  law  furnish  an  adequate,  speedy. 


46 

and  inexpensive  remedy  to  the  public,  whereby  in  a  proper  case 
rates  may  be  limited  to  those  which  are  reasonable  and  just. 
Some  tribunal  which  stands  in  the  attitude  of  a  genuine  arbi- 
trator. 

Railroads,  as  a  rule,  treat  all  commissions  as  their  enemies, 
unless  the}'  can  control  them  ;  so  the}'  do  courts  and  juries. 
It  is  the  fact  of  regulation  which  they  abhor,  and  you  may 
rest  assured  that  a  wrongdoer  always  stands  in  that  attitude 
to  the  investigator  of  his  misdoings.  I  do  not  mean  by  this 
that  these  gentlemen  who  operate  these  railroads  believe  they 
are  doing  any  wrong.  They  do  not,  as  before  stated.  They 
believe  that  they  are  entitled  to  earn  all  they  can,  and  are  honest 
in  that  belief.  Their  honest  effort  is  to  do  that  for  their  re- 
spective companies,  and  T  am  sure  that  in  no  instance  can  a 
railway  o])erator  or  traffic  man  be  found  who  believes  that  his 
road  is  earning  too  much.  I  have  said  all  along  that  therein 
lies  the  difficulty.  Just  so  long  as  that  idea  continues,  just  so 
long  will  they  treat  commissions,  or  any  one  else  as  to  that  mat- 
ter, as  an  enemy  when  it  is  sought  by  them  to  regulate  the  rail- 
road rates.  So  it  is  that  in  regard  to  any  law  which  shall  give 
to  the  public  a  remedy,  whereby  any  commission  or  court  or 
other  tribunal  can  speedily  and  efifectually  decide  that  a  given 
rate  is  wrong  and  put  into  effect  a  proper  one.  They  honestly 
believe  no  such  remedy  should  exist,  and  will  fight  it  to  a  finish 
with  all  their  skill  and  every  scheme  which  can  be  devised. 
The  people  will  have  to  make  their  voice  heard,  very  strong,  in 
Congress  to  oV)tain  any  relief. 

The  fact  is,  very  few  Congressmen  are  informed  in  detail  upon 
the  subject  and  they  have  nearly  all  been  brought  under  some 
obligation  or  other  to  the  railroad — not  illegitimate,  perhaps, 
but  real  and  legitimate,  though  some  are  mere  railroad  repre- 
sentatives— so  that  in  the  very  beginning  of  your  efforts  you  are 
working  hard  against  the  grain.  Furthermore,  those  of  you 
who  do  not  expect  to  feel  the  pressure  of  the  railroads  to  thwart 
your  efforts  and  who  are  willing  to  go  into  the  fight,  provided  you 
are  not  thereby  incurring  the  ill  will  of  the  railroads,  you  should 
stay  out.  But  don't  forget  that  this  fight  has  to  be  made. 
Either  the  other  industries  of  this  country  must  limit  railroad 
rates,  or  take  the  consequences  which  will  as  surely  follow  as 
night  follows  day,  viz,  to  have  such  tribute  levied  upon  them  as 
the  railroads  believe  to  their  own  best  interest. 

As  an  exam})le  of  the  assaults  Avhich  are  made  with  the  spirit 
of  intimidation,  it  has  been  [)ersistently  urged  in  railway  jour- 
nals and  by  writers  employed  by  the  railways,  that  the  Interstate 
Commerce  Commission  is  engaged  in  an  unholy  campaign  to 
secure  more  power,  which  the  railways  denominate  "  an  untem- 
pered  thirst  after  powers  Congress  cannot  constitutionally  dele- 
gate," exhibiting  a  "vaulting  ambition."  as  it  is  described. 
The  official  reports  of  the  Commission  to  Congress,  their  rec- 


47 

onimendations  for  amendments  of  tlie  law  so  as  to  make  it  ^ect- 
ive,  are  characterized  as  otiicious  intermeddling.  Every  effort 
which  has  l)een  made  to  procure  the  amendments  to  tlie  law 
which  would  make  it  effective,  it  is  asserted  hv  the  railroad  ma<i- 
azine  writers,  is  inspired  h}''  tlie  Interstate  Commerce  Commis- 
sion. Certain  Congressmen,  who  represent  railroads  rather  than 
their  constituent'*,  have  voiced  these  sentiments.  Thc}^  charge 
that  your  past  etlbrts  fall  within  this  category.  Wliile  the 
charge  is  unfounded,  it  shows  the  lengths  to  which  they  will 
go  to  prevent  legislation.  If  the  Commission's  reports  have 
informed  you.  it  was  your  own  right  to  he  so  informed  and  to 
act  as  you  please.  Congress  has  required  of  the  Commission 
that  it  make  its  reports  to  Congress  annually,  etc.,  "  together 
with  such  recommendations  as  to  additional  legislation  relating 
thereto  as  tlie  Commission  may  deem  necessary  "  (sec.  21),  yet 
the  very  fact  that  it  performs  this  statutory  official  duty  is  made 
the  hasis  of  the  criticism  that  it  has  a  "  vaulting  and)ition  "  for 
more  power.  Indeed,  they  cite  the  fact  that  Congress  has  not 
acted  upon  the  Commission's  recommendations  as  evidence  that 
the  Commission  was  seeking  a  power  to  which  it  was  not  enti- 
tled ;  and  eff'orts  which  hundreds  of  thousands  of  citizens  have 
made  to  have  the  law  amended, so  as  to  effectively'  complete  it, 
as  it  was  originally  intended,  are  characterized  as  heing  inspired 
by  the  Commission  simply  because  the  Commission,  in  perform- 
ance of  its  duty,  recommended  such  amendments.  If  they 
would  be  fair,  they  would  direct  tiieir  arguments  against  the 
necessity  or  desirability  of  such  amendments;  but  they  fear  to 
meet  you  in  the  open  uj)on  that  subject,  but  instead,  procure 
their  representatives  in  Congress  to  balk  you  by  killing  your 
bills  in  committees,  packed  against  the  jiublic  interest  and  in 
behalf  of  the  railroads,  trusts,  and  other  quasi-public  corpora- 
tions, and  then  tell  you,  because  Congress  hasn't  acted,  is  proof 
that  it  shouldn't  do  so,  and  therelbre  that  your  demands  are 
inspired  by  the  Commission,  and,  being  so  inspired,  are  wrong. 

The  thraldom  into  which  this  country  may  fall  b}'  deferring 
the  day  of  appropriate  remedial  regulation  should  arouse  every 
thoughtful  citizen,  regardless  of  his  politics.  Since  the  date  of 
the  decision  of  the  Supreme  Court  that  the  Commission  could 
not  name  the  proper  rate  to  be  observed,  the  combination  of 
railroads,  by  jmrchase  and  sale,  by  mergers,  by  concentration 
of  controlling  interests  in  stocks,  by  traffic  bureaus,  and  various 
methods,  has  wrought  such  wonderful  change,  tiiat  it  is  appall- 
ing to  behold  their  power  and  more  so  to  feel  it.  If  nothing  is 
done  for  another  seven  j^ears  it  will  be  too  late.  New  standards 
of  rates,  new  standards  of  value,  as  the  bases  of  rates,  more  com- 
plete control,  more,  vastly  more,  political  power,  will  put  it  be- 
yond your  power  to  eff'ectively  do  what  can  be  done  if  Congress 
acts  now. 

Not  alone  is  relief  needed  from  existing  conditions,  but  far 


48 

more  important  is  it  to  prevent  what  is  otherwise  (o  follow. 
Since  this  Convention  met  four  3^ears  ago,  look  how  railroad 
values  have  enhanced,  and  that  because  of  their  ability  -to 
increase  earnings  through  advanced  rates  and  otherv-ise.  You 
were  told  then  that  you  would  fare  better  if  left  to  ihi'  teiKler 
mercies  of  the  railroads.  Have  you  had  the  experience?  What 
has  been  the  result  ?  If  their  power  and  influence  shall  increase 
as  rapidly  in  the  next  four  years,  are  you  al)le  to  say  that  they 
will  not  be  able  to  dictate  who  shall  be  appointed  on  the  Inter- 
state Commerce  Commission  ?  When  that  da}'  comes — and  un- 
less public  offices  are  cleaned  by  substituting  representatives  of 
the  whole  people,  instead  of  representatives  of  certain  interests, 
it  will  come — then,  indeed,  is  the  day  of  your  undoing  complete. 
Arouse  your  Representatives  to  a  sense  of  their  duty,  to  the  im- 
pending danger!  Command  their  obedience  to  duty.  Without 
doubt  the  American  people  are  again  confronted  with  a  condition 
wherein  vigilance  is  the  price  of  liberty.     Will  you  exercise  it  ? 

If  you  ask  why  the  Cattle  Raisers'  Association  of  Texas  and 
the  Cattle  Growers'  Interstate  P^xecutive  Committee  are  repre- 
sented here,  to  lend  all  the  aid  they  can  to  this  movement,  I  will 
tell  you,  it  is  because  we  have  felt  in  a  serious  manner  the  efl'ect 
of  the  exercise  of  this  unrestrained  power  to  advance  rates  which 
we  seek  to  prevent.  Whether  we  are  right  or  wrong  in  the  be- 
lief that  our  rates  haye  been  advanced  to  a  point  which  makes 
them  unreasonable,  we  verily  believe  it. 

There  were  shipped  over  the  Texas  railroads  alone,  during  the 
fiscal  year  ending  June  30.  1903,  of  live  stock  1,504.916  tons — 
equal  to  143,000  carloads — of  which  it  is  safe  to  say  85  percent. 
was  iiUerstate,  of  which  85  per  cent,  was  cattle,  and,  making  due 
allowances  for  duplication  in  the  estimate,  it  is  safe  to  say,  there- 
fore, that  our  interstate  shipments  of  cattle  amounted  to  over 
100,000  carloads.  The  advances  in  these  interstate  rates,  for 
the  years  1899  to  1903,  inclusive,  amounted  to  an  average,  as  we 
believe,  of  $17.50  per  carload,  equivalent  to  $1,750,000  per  annum 
above  what  would  have  been  the  average  cost  of  transporting  a 
like  tonnage  for  the  average  of  eight  or  ten  years  next  previous 
to  1899.  Think  of  it;  this  enormous  burden  added  to  one  in- 
dustry in  one  State  alone.  And  they  tell  us  these  rates  are  still 
too  low.  If  so.  the}'  ought  to  be  advanced.  But  shall  those  who 
get  the  money  decide  it?  Other  districts  have  been  subjected 
to  advances  in  live-stock  rates,  and  for  like  reasons  with  our- 
selves are  urging  that  (Congress grant  appropriate  remedies.  None 
of  us  are  asking  that  Congress  decide  our  controversies,  but  that 
it  provide  an  appropriate  remedy  and  tribunal  to  do  so  speedily 
and  effectively. 

Believing  that  other  lines  of  business  and  industries  repre- 
sented by  you  have  suffered  like  wrongs  with  ourselves,  and  are 
in  like  danger  of  having  still  further  burdens  heaped  upon  you, 
we  have  met  here  with  you  to  make  common  cause  in  behalf  of 
ourselves  and  the  public  by  appeals  to  Congress  to  do  its  duty. 


/ 


49 


What  I  have  said  on  other  occasions  will  bear  repeating,  viz: 
That  as  to  our  tSouth western  rates  the  Southwestern  taritl'  com- 
mittee, with  its  office  here  in  St.  Louis,  composed  of  all  of  the 
Southwestern  lines  of  railroads,  holds  its  meetings  to  discuss  any 
proposeil  changes  in  rates,  and  then  to  publish  them  when 
changed.  These  changes  are  principally  after  conference  be- 
tween interested  lines,  resulting  in  making  of  the  same  rates  by 
each,  on  the  same  day,  and  maintaining  them  till  a  similar 
change  is  made.  These  advances  have  all  been  made  that  way, 
and  the  rates  as  so  advanced  have  been  maintained.  No  denial, 
however  solemnly  sworn  to,  can  deprive  these  facts  of  tlieir 
necessar}'^  probative  force  to  show  that  it  constitutes  a  coml)ina- 
tion  in  restraint  of  trade.  It  may  be  necessary  that  these  rail- 
roads must  confer  in  order  to  make  or  keep  up  their  rates  to  the 
standard  of  affording  com{)ensation  which  they  deem  sufficient; 
out  if  so,  it  affords  all  the  stronger  reason  why  they  should  be 
regulated.  It  is  plain  that  if  such  "  conferences,"  as  they  are 
pleased  to  term  their  acts,  can  result  as  itidoes,  to  have  put  into 
effect  three  substantial  advances  in  live-stock  rates  in  four  or 
five  years,  which  have  been  uniformly  maintained,  there  is  no 
limit  to  which  the}'  might  not  go,  except  the  difficulty  of  a  con- 
currence t)f  all  lines,  which  these  conferences  have  so  far  secured 
for  past  advances,  and  in  fact  another  advance  has  been  seriousl}' 
threatened. 

These  same  conditions  apph^  to  your  rates,  no  doubt,  and  cer- 
tainh'  call  for  most  vigorous  action  on  the  part  of  Congress. 
And  this  is  what  we  are  here  for.  We  are  demanding  nothing 
but  justice  or  an  opportunity  to  get  it.  Shall  we  succeed?  Or 
shall  Congress  itself,  as  well  as  ourselves,  be  subject  to  the  dicta- 
tion of  these  powerful  corporations  ? 


The  Committee  on  Resolutions  then  submitted  the  following 
report : 

To  the  Interstate  Commerce  Laiv  Convention. 

GicNTLEMEN :  Your  Committee  on  Resolutions,  to  which  was 
referred  the  petition  to  Congress,  submitted  yesterda}',  by  Mr. 
E.  P.  Bacon  in  behalf  of  the  Executive  Committee,  begs  leave 
to  report,  that  we  recommend  the  adoption  by  this  Convention 
of  said  j)etition  as  presented. 

For  the  Committee:   E.  P.  Bacon, 

Chairman. 

The  report  of  the  committee  and  petition  referred  to  therein 
(as  printed  on  pages  7-8)  were  adopted. 


50 

The  Committee  on  Resolutions  submitted  the  following : 

To  the  Interstate  Commerce  Law  Convention. 

Gentlemen  :  Your  Committee  on  Resolutions  begs  leave  to 
recommend  the  adoption  of  the  following  resolution  : 

Resolved,  That  the  heart}'  thanks  of  this  Convention  be  ex- 
tended to  Hon.  John  D.  Kernan,  Hon.  Wm.  Larrabee,  and  Hon. 
S.  H.  Cowan  for  the  very  al)le  addresses  delivered  by  them,  and 
also  to  Gov.  D.  R.  Francis  for  liis  cordial  greeting  in  beiialf  of 
the  Louisiana  Purchase  Exposition  ;  and 

Resolved  further.  That  our  thanks  are  due  to  the  officers  of  the 
Exposition,  for  providing  the  Convention  with  needed  facilities 
for  its  use  in  holding  its  several  sessions. 

For  the  Committee :  E.  P.  Bacon, 

Chairman. 

The  report  and  resolution  were  ado})ted. 


A  letter  was  read  from  the  Commissioners  of  tlie  Lewis  and 
Clark  Centennial  Exposition,  of  Portland,  Oregon,  extending  an 
invitation  to  this  Convention  to  hold  its  next  meeting  at  Port- 
land, in  19U5,  which  was,  b}'^  motion,  referred  to  the  Executive 
Committee. 

A  telegram  was  read  from  the  Committee  on  Legislation  of 
the  Lumbermen's  Exchange  of  Phihulelphia,  Pa.,  expressing 
S3'mpathy  with  the  cause  of  this  Convention  and  endorsement 
of  such  action  as  it  ma}^  take  toward  strengthening  the  Inter- 
state Commerce  Law. 


The  Committee  on  Resolutions  then  submitted  the  following 
report : 

To  the  Interstate  Commerce  Law  Convention. 

Gentlemen:  Your  Committee  on  Resolutions,  to  which  was 
referred  the  resolution,  introduced  yesterday,  by  Mr.  E.  M.  Fer- 
guson, of  Duluth,  Minn.,  representing  the  Duluth  Commercial 
Club  and  the  Duluth  Produce  and  Fruit  Exchange,  begs  leave 
to  report,  that  we  recommend  the  adoption  of  the  said  resolu- 
tion as  an  expression  of  the  sense  of  this  Convention  as  to  future 
needed  legislation. 

For  the  Committee :  E.  P.  Bacon, 

Chairman. 


51 

Mr.  E.  G.  Davies,  of  Chicago,  representing  tlie  Anna  Fruit 
Growers'  Association,  moved  the  adoption  of  the  resolution  re- 
ferred to,  and  addressed  the  Convention  at  length  upon  the 
subject  of  remedial  legislation  and  the  enforcement  of  existing 
laws.  The  motion  was  seconded  by  Mr.  \V.  B.  Stillwell,  of 
Savannah,  Georgia,  representing  the  National  Lumber  Manu- 
facturers' Association. 

An  extended  debate  followed,  the  speeches. being  limited  to 
two  minutes,  toward  the  close.  The  re[)ort  of  the  Committee  on 
Resolutions  and  the  resolution  recommended  therein  (as  printed 
on  pages  24-2(>)  w-ere  adopted. 


Judge  S.  H.  Cowan,  of  Ft.  Worth,  Texas,  offered  a  resolution, 
as  follows  : 

Resolved,  That  the  Executive  Committee  be,  and  it  is  hereby, 
instructed  to  use  its  judgment  as  to  bringing  the  several  subjects 
referred  to  in  the  resolution  last  adopted  to  the  attention  of  the 
United  States  Congress. 

Mr.  L.  B.  Boswell,  of  Quincy,  Illinois,  representing  the  Quincy 
Freight  Bureau,  seconded  the  motion  of  .Judge  Cowan  to  ado})t 
this  resolution,  and  urged  that  the  Executive  Committee  use 
caution  not  to  divert  its  efforts  from  the  primary  purpose  of  this 
organization. 

The  resolution  was  adopted. 


The  following  resolution  was  submitted  : 

Whereas  the  carriers  in  official  classification  territory  are 
about  to  require  shippers  to  sign  a  contract  of  shi[)ment  which 
is  stated  on  its  face  not  to  be  negotiable  ;  and 

Whereas  the  said  contract  of  shipment  contains  numerous 
conditions  limiting  the  connnon-law  lial)ility  of  carriers;  and 

Whereas  if  the  l)ill  of  lading  be  marked  "  not  negotiable,"  it 
is  difficult,  if  not  impossible,  to  obtain  advances  thereon;  and 

Whereas  a  penalty  of  20  per  cent,  increase  in  the  class  rates 
is  demanded,  unless  shippers  sign  a  contract  releasing  carriers 
from  liability:  Therefore  be  it 

Resolved,  That  we,  the  representatives  of  commercial  organi- 
zations of  the  United  States,  in  convention  assembled,  as  the 
Interstate  Commerce  Law  Convention,  at  St.  Louis,  Mo.,  October 
28  and  29,  1904,  recommend  to  all  shippers  that  they  refuse  to 


52 

sign  special  contracts  of  shipments,  and  that  the}''  refuse  to  ac- 
cept bills  of  lading  marked  "  not  negotiable,"  and  that  they 
insist  upon  goods  being  transported  as  heretofore,  namely,  as  at 
common  law,  paying  therefor  the  current  freight  rate. 

Geo.  G.  Whitworth, 
Abraham  May, 
H.  D.  Van  Asmus, 
Wm.  N.  Rowe, 
George  A.  Davis, 
Delegates  from  the  Board  of  Trade, 

Grand  Rapids,  Mich. 

The  resolution  was  adopted. 


There  being  no  further  business,  at  2.30  o'clock  p.  m.  the 
Convention  adjourned. 
Attest :  ^ 


Secretary. 


Meeting  of  Executive  Committee. 


St.  Louis,  Mo.,  October  29,  190 Jf. 

Immediately  upon  adjournment  of  the  Intel-state  Commerce 
Law  Convention,  upon  the  above  date,  the  Executive  Committee 
met  in  the  Hall  of  Congresses,  Louisiana  Purchase  Exposition 
Grounds,  and  organized  for  the  ensuing  term. 

The  meeting  was  called  to  order  by  Mr.  E.  P.  Bacon,  of  Mil- 
waukee, Wis.,  at  2.45  o'clock  p.  m.,  all  members,  with  the  ex- 
ception of  Mr.  H.  D.  Loveland,  of  San  Francisco,  Cal.,  being 
present. 

The  following  officers  of  the  Executive  Committee  were  unani- 
mously elected : 

Chairman,  Mr.  E.  P.  Bacon,  of  Milwaukee,  Wis. 

Vice-Chairman,  Mr.  C.  H.  Seybt,  of  St.  Louis,  Mo. 

Treasurer,  Mr.  R.  S.  Lyon,  of  Chicago,  111. 

Secretary,  Mr.  Frank  Barry,  of  Washington,  D.  C. 

A  sub-committee  was  appointed  and  charged  with  the  duty 
of  proceeding  to  Washington,  about  the  middle  of  November,  to 
lay  plans  for  active  work  upon  the  assembling  of  Congress. 


53 

The  Secretary  was  instructed  to  publish,  as  early  as  possible, 
a  complete  report  of  the  proceedings  of  the  Convention. 

The  following-named  persons  were  appointed  State  repre- 
sentatives of  the  Executive  Committee,  pursuant  to  the  terms  of 
the  resolution  introduced  by  Judge  S.  H.  Cowan,  and  adopted 
by  the  Convention,  on  October  28th  :   (Page  6.) 

State  Representatives. 

Alabama,  R.  E.  Pettus,  Huntsville,  Ala. 

Arkansas,  J.  E.  Hundley,  Ft.  Smith,  Ark. 

California.  Seth  Marshall,  San  Bernardino,  Cal. 

Colorado,  Geo.  J.  Kindel,  Denver,  Colo. 

Connecticut,  0.  S.  Wood,  Ellington,  Conn. 

District  of  Columbia,  John  B.  Daish,  Washington,  D.  C. 

Georgia,  W.  E.  Newill,  Atlanta,  Ga. 

Idaho,  W.  R.  Kivett,  Boise,  Idaho. 

Illinois,  E.  C.  Kreider,  Jacksonville,  111. 

Indiana,  M.  S.  Blish,  Seymour,  Ind. 

Iowa,  A.  C.  Hutchins,  Des  Aloines,  la. 

Kansas,  J.  E.  Evans.  Emporia.  Kans. 

Kentucky,  C.  H.  Callahan,  Louisville,  Ky. 

Louisiana,  C.  W.  Robinson,  New  Orleans,  La. 

Maryland,  Charles  England,  Baltimore,  Md. 

Massachusetts,  Geo.  F.  Mead,  Boston,  Mass. 

Michigan,  Geo.  C.  Warren,  Saginaw,  Mich. 

Minnesota,  K  M.  Ferguson,  Duluth,  Minn. 

Mississippi,  J.  W.  Roos,  Natchez,  Miss. 

Missouri,  J.  B.  Denvir,  St.  Louis,  Mo. 

Montana,  J.  M.  Boardman,  Oswego,  Mont. 

Nebraska,  J.  J.  Bartlett,  Omaha,  Nebr. 

Nevada,  Thos.  Nelson,  Stone  House,  Nev. 

New  Hampshire,  Geo.  R.  Drake,  Manchester,  N.  H. 

New  Jersey,  A.  B.  Ay  res,  Newark,  N.  J. 

New  Mexico,  G.  P.  Money,  Las  Vegas,  N.  Mex. 

New  York,  T.  B.  Dunn,  Rochester,  N.  Y. 

North  Carolina,  C.  M.  Whitlock,  Wilmington,  N.  C. 

Ohio,  Wm.  H.  Sigler,  Cleveland,  Ohio. 

Oklahoma,  C.  V.  Topping,  Oklahoma  City,  Okla. 

Oregon,  C.  H.  Mc Isaac,  Portland,  Ore. 

Pennsylvania,  A.  P.  Burch field,  Pittsburg,  Pa. 

Rhode  Island,  Willard  Lansing,  Providence,  R.  I. 


Attest : 


54 

South  Carolina,  H.  R.  Jackson,  Charleston,  S.  C. 
South  Dakota,  F.  M.  Stewart,  Buffalo  Gap,  S.  Dak. 
Tennessee,  C.  B.  Carter,  Knoxville,  Tenn. 
Texas,  W.  W.  Turney,  El  Paso,  Tex. 
Utah,  F.  J.  Hagenbarth,  Salt  Lake  Cit}',  Utah. 
Vermont,  T.  C.  Bronson,  Hardwick,  Vt. 
Virginia.  Eugene  Withers,  Danville,  Va. 
Washington,  Victor  H,  Beckman,  Seattle,  Wash. 
Wisconsin,  A.  F.  Rock,  Superior,  Wis. 
Wyoming,  C.  W.  Barney,  Gillette,  Wyo. 

The  committee  then  adjourned,  subject  to  the  call  of  the 
chairman.  ,^;:^ 

Secretary. 
THE  COOPER-QUARLES  BILL. 

H.  R.  6273,  introduced  by  Representative  H.  A.  Cooper,  De- 
cember 8,  1903,  and  referred  to  the  House  Committee  on  Inter- 
state and  Foreign  Commerce,  which  is  constituted  as  follows : 

Republicans. — W.  P.  Hepburn,  of  Iowa,  chairman  ;  J.  S.  Sher- 
man, of  New  York  ;  I.  P.  Wanger,  of  Pennsylvania ;  J.  R.  Mann, 
of  Illinois;  W.  C.  Lovering,  of  Massachusetts;  F.  C.  Stevens,  of 
Minnesota;  C.  H.  Burke,  of  South  Dakota;  J.  J.  Esch,  of  Wis- 
consin ;  F.  W.  Cushman,  of  Washington  ;  T.  B.  Kyle,  of  Ohio ; 
C.  E.  Townsend,  of  Michigan. 

Democrats. — R.  C.  Davey,  of  Louisiana ;  W.  C.  Adamson,  of 
Georgia;  D.  W.  Shakleford,  of  Missouri;  W.  H.  Ryan,  of  New 
York;  William  Richardson,  of  Alabama;  W.  B.  Lamar,  of 
Florida. 


S.  2439,  introduced  by  Senator  J.  V.  Quarles,  December  12, 
1903,  and  referred  to  the  Senate  Committee  on  Interstate  Com- 
merce, which  is  constituted  as  follows : 

Republicans. — S.  B.  Elkins,  of  West  Virginia,  chairman  ;  S.  M, 
Cullom,  of  Illinois;  N.  W.  Aldrich,  of  Rhode  Island;  John 
Kean,  of  New  Jersey;  J.  P.  Dolliver,  of  Iowa;  J.  B.  Foraker,  of 
Ohio;  M.  E.  Clapp,  of  Minnesota;  J.  H.  Millard,  of  Nebraska. 

Democrats. — ^B.  R.  Tillman,  of  South  Carolina ;  A.  J.  Mc- 
Laurin,  of  Mississippi;  E.  W.  Carmack,  of  Tennessee;  M.  J. 
Foster,  of  Louisiana;  F.  G.  Newlands,  of  Nevada. 


The  House  and  Senate  bills  are  identical,  and  read  as  follows : 


55 

A  Bill  Further  to  Define  the  Duties  and  Powers  of  the 
Interstate  Commerce  Commission. 

Be  it  enacted  by  the  Senate  and  House  of  Representatives  of  the 
United  States  of  Amei'ica  in  Conifress  assembled,  Tliat  any  order 
made  hy  the  Interstate  Commerce  Commission,  after  hearing 
and  determination  had  on  any  petition  now  pending  or  liere- 
after  presented,  pursuant  to  section  thirteen  of  an  act  entitled 
"An  act  to  reguhite  commerce,"  approved  Februar}'  fourth, 
eighteen  luindred  and  eighty-seven,  dechiring  any  existing  rate 
or  rates  in  said  petition  complained  of  for  the  transportation  of 
persons  or  proi)erty,  or  any  reguhition  or  |)ractice  afiectingsucli 
rates,  or  facilities  afforded  in  connection  therewith,  to  be  un- 
justly discriminating  or  unreasonable,  and  declaring  what  rate 
or  rates,  regulation,  or  practice  affecting  such  rate  or  rates  would 
be  just  and  reasonable,  and  requiring  them  to  be  substituted 
therefor,  shall  become  operative  and  be  observed  by  the  party 
or  parties  against  whom  the  same  shall  be  made  within  thirty 
days  after  notice,  or,  in  case  of  proceedings  for  review,  as  here- 
inafter {irovided,  then  within  sixty  days  after  notice;  but  such 
order  may  at  any  time  be  modified,  suspended,  or  revoked  b}'^ 
the  Commission  upon  full  hearing  of  all  {parties  in  interest. 

Sec.  2.  That  when  the  rate  substituted  by  tlie  Commission  as 
hereinbefore  provided  is  a  joint  rate,  and  the  carriers,  parties 
thereto.fail  to  agree  upon  theapportionnientthereof  among  them- 
selves within  twenty  days  after  notice  of  such  order,  the  Com- 
mission may  is.sue  a  supplemental  order  declaring  the  ])ortion 
of  such  joint  rate  to  be  received  by  each  carrier  party  thereto, 
\vhich   order  shall   be  observed   by  such  carriers.      When  the 
order  of  the  Commission  prescribes  the  just  relation  of  rates  to 
or  from  common  points  on  the  lines  of  the  several  carriers  par- 
ties to  the  proceeding,  and  such  carriers  fail  to  notif}'  the  Com- 
mission within  twenty  days  after  notice  of  such  orderthat  they 
have  agreed  among  tliemselves  as  to  the  changes  to  be  made  to 
effect  compliance  therewith,  the  Commission  may  issue  a  sup- 
plemental order  prescribing  the  rates  to  be  charged  to  or  from 
such  common  points  by  either  or  all  of  the  parties  to  the  pro- 
ceeding, which  ordei-  shall  be  observed  by  the  carriers  concerned. 
Sec.  3.  That  every  order,  as  to  its  justness.  reasonal)leness,  and 
lawfulness,  shall  be  reviewal)le  by  any  circuit  court  of  the  United 
vStates  for  an}'  district  througli  whicli  any  portion  of  the  road  of 
a^ny  carrier  named  in  such  order  shall  run,  to  which  a  petition 
filg-^l  on  its  equity  side,  within  twenty  days  from  the  service  of 
such  order,  shall  Ije  first  presented  by  any  party  interested.     It 
shall ^^6  the  duty  of  the  Commission,  within  twenty  days  after 
notice  ^^^  cause  to  be  filed  in  any  court  to  wliich  such   petition 
shall  ^^^'6  ^^6^"  •'^o  presented  a  duly  certified  copy  of  its  entire 
recordi'^  connection  with  the  order  to  be  reviewed,  including 
petitioir  answers,  te.stimony,  report  and  opinion  of  the  Commis- 
sion, its  order,  and  all  other  papers  whatsoever  in  connection 
therewth.     The  court  shall  tliereupon  proceed  to  hear  the  same 
ui'on  |:ft.tition.  record,  and  testimony  returned  by  the  Commis- 
sion; or,''i  its  discretion,  may.  upon  the  application  of  either 


56 

party  and  in  such  manner  as  it  shall  direct,  cause  additional 
testimon_y  to  be  taken;  and  thereupon  if,  after  hearing,  said 
court  shall  be  of  the  opinion  that  said  order  was  made  under 
some  error  of  law,  or  is,  upon  the  facta,  unjust  or  unreasonable, 
it  shall  modify,  set  aside,  or  annul  the  same  by  appropriate 
decree;  otherwise  the  petition  shall  be  dismissed.  Pending 
such  review,  however,  the  court  may,  upon  application  and 
hearing,  if  in  its  opinion  the  order  is  clearly  unlawful  or  erro- 
neous, suspend  said  order.  Any  party  to  the  cause  may,  within 
thirty  days  of  the  rendition  of  any  final  decree  of  said  court, 
appeal  to  the  Supreme  Court  of  the  United  States,  which  court 
shall  proceed  to  hear  and  determine  such  api)eal.  But  neither 
the  order  of  the  circuit  court  nor  the  execution  of  any  writ  or 
process  thereon  shall  be  stayed  or  suspended  during  the  pend- 
ency of  such  appeal.  The  said  several  courts  of  the  United 
States  shall  be  and  are  vested  with  full  jurisdiction  and  all  nec- 
essary powers  in  the  premises.  The  case  in  both  the  circuit 
court  and  the  Supreme  Court  shall  have  precedence  over  all 
except  criminal  cases. 

Sec.  4.  That  the  defense  in  all  such  proceedings  for  review  shall 
be  undertaken  by  the  United  States  district  attorne}'^  for  the  dis- 
trict wherein  the  action  is  brought,  under  the  direction  of  the  At- 
torney General  of  the  United  States,  and  the  costs  and  ex})ense.s 
of  such  defense  shall  be  paid  out  of  the  appropriation  for  the  ex- 
penses of  the  courts  of  the  United  States.  The  Commission  may, 
with  the  consent  of  the  Attorney  General,  employ  special  coun- 
sel in  any  proceedings  under  this  act,  paying  the  expense  of 
such  employment  out  of  its  own  appropriation. 

Skc.  5.  That  if  any  party  bound  thereby  shall  refuse  or  neg- 
lect to  obey  or  perform  any  order  ot  the  Commission  mentioned 
in  section  one  of  this  act  at  any  time  while  the  same  is  in  force, 
obedience  and  performance  thereof  shall  be  summarily  enforced 
by  writ  of  injunction  or  other  proper  process,  mandator}''  or 
otherwise,  which  shall  be  issued  by  any  circuit  court  of  the 
United  States  upon  petition  of  said  Commission  or  of  any  party 
interested,  accompanied  by  a  certified  copy  o'  the  order  alleged 
to  be  violated  and  evidence  of  the  violation  all-.-ged,  and  in  addi- 
tion thereto  the  offending  party  shall  be  subject  to  a  pennlty  of 
five  thousand  dollars  for  each  day  of  the  conimnan<:  >ch 

violation,  which,  together  with  costs  of  suit,  shall  be  recj- 1>  dble 
by  said  Connnission  by  action  of  debt  in  any  rircnit  conit  of 
the  United  States,  and  when  so  recovered  shall  the  use  o{ 

the  United  States. 

Skc.  6.  That  all  acts  or  parts  of  acts  in  con'.  ■  tu  i  ,    p^Q. 

visions  of  this  act  are  hereby  repealed,  but  sue-  '  shi-.([  not 

affect  causes  now  pending  in  court  nor  rights  w' ;  ■  ve  ahead  v 

accrued,  but  such   causes  shall  be  prosecuted  ^^^"c\|gi(,^ 

and  such  rights  enforced  in  a  manner  hereto^'  P'''>^'ifed  by 
law.  All  existing  laws  relative  to  testimon}  oases  f)r  pro- 
ceedings under  or  connected  with  the  Act  to  Re,;iuate  Corify^erce 
shall  also  apply  to  any  case  or  proceeding  authorized  by  tf-.-  ar-t 

Skc.  7.  That  this  act  shall  take  effect  from  iU  pv..«sage. 


f- 


PROCEEDINGS 


of  the  '•■■-  -      ^ 


^0; 


/* 


Interstate  Commerce  Law  Convention 


held  at 


CHICAGO,  ILLINOIS 
October  26  and  27,  1905 


REPORT  OF  PROCEEDINGS 

OF 

The  Interstate  Commerce  Law  Convention 

Held  at  Chicago,  Illinois,  October  26  and  27,  1905. 


FIRST  SESSION. 


Chicago,  III.,  Oct  26,  1905. 

The  first  session  of  the  Interstate  Commerce  Law  Convention 
was  called  to  order  in  Steinway  Hall,  Chicago,  at  10 :30  a.  m., 
on  Thursday,  October  26,  1905,  by  Hon.  S.  H.  Cowan,  of  Fort 
Worth,  Texas,  who  said  : 

"Gentlemen  of  the  Convention:  I  regret  to  have  to  report 
to  you  that  Mr.  E.  P.  Bacon,  of  Milwaid^ee,  who  is  Chair- 
man of  the  Executive  Committee  of  the  Interstate  Commerce 
Law  Convention,  and  who  has  served  you  on  that  com- 
mittee so  long  and  faithfully,  is  unable  physically  to  be  with  you 
today  and  open  this  meeting.  He  has  requested  by  telegram 
and  by  letter  that  I  call  this  meeting  to  order.  I  have  but  little 
to  say  to  you  except  that  the  gentlemen  whom  we  face  today  are 
at  least  willing  to  abide  by  the  consequences  of  what  the  Execu- 
tive Committee  has  determined,  and  that  they  can  afford  at 
least  in  meeting  in  this  Convention  to  endorse  the  principles 
announced  by  our  great  President,  Theodore  Roosevelt. 

It  is  not  a  partisan  meeting  which  I  call  together.  It  is  a 
meeting  of  men  who  have  come  here  without  political  desires  or 
wishes,  without  fear  of  punishment,  and  above  all,  without  the 
hope  of  reward,  except  the  reward  of  knowing  that  they  are 
doing  that  which  every  good  citizen  ought  to  do  for  his  country. 

Our  Convention  may  not  be  as  large  in  numbers  as  it  might 
have  been  had  we  the  means  of  bringing  hundreds  of  delegates 
here,  had  we  the  money  to  pay  for  it,  had  we  the  other  means 
of  placing  them  here.  But  those  of  you  who  are  here  (and  I 
personally  know  that  it  is  a  representative  audience,  a  repre- 
sentative assembly)  will  act  for  the  best  interests  of  your  con- 
stituents, untrammeled  by  those  who  seek  to  destroy  the  very 
thing  which  you  propose  to* do. 

ii'he  Executive  Committee  members,  without  compulsion,  act- 
ing- entirely  for  the  benefit  of  tlic  public,  without  the  expectation 


of  office,  seeking  no  glory  to  tliemselves,  bvit  knowing  that  some- 
body must  attend  in  some  degree  to  the  jmblic  good  and  look 
after  the  public  weal,  have  devoted  their  time  and  their  money 
to  this  cause,  and  they  liave  found  it  necessary,  to  their  regret, 
to  enforce  tlie  rule  that  no  one  shall  be  admitted  to  the  floor  of 
the  Convention  who  lias  not  signed  a  statement  of  allegiance  to 
the  objects  of  tliis  Convention,  as  a  condition  precedent  to  par- 
ticipating in  tlie  temporary  organization  of  this  meeting,  and 
they  have,  according  to  tlie  power  vested  in  them  at  the  last  meet- 
ing of  tlie  Interstate  Commerce  Law  Convention  at  St.  Louis, 
appointed  a  temporary  presiding  officer,  to  Mdiom  I  now  intro- 
duce you,  Mr.  E.  W.  Higbie,  of  New  York  City." 

Chairman  Higbie:  "Gentlemen,  1  appreciate  the  honor 
which  3^ou  have  conferred  upon  the  lumbermen  of  the  United 
States  through  jouv  Executive  Committee,  in  selecting  one  of 
their  number  to  proceed  with  the  organization  of  this  Conven- 
tion, and  I  want  to  thank  you.  For  myself,  I  consider  it  a 
great  honor  to  be  called  upon  to  open  and  to  help  to  organize 
a  Convention  composed  of  so  many  representative  men  from 
so  many  representative  organizations.  I  believe  that  all  of  you 
liave  been  interested  in  this  proposed  legislation  so  long  that  you 
are  thoroughly  familiar  with,  and  do  not  in  any  sense  under- 
estimate, the  strength  of  the  opposition  witli  which  this  move- 
ment is  confronted.  But,  gentlemen,  there  is  one  power  in  the 
United  States  which  is  still  supreme.  I  refer  to  the  power  of 
public  opinion  as  expressed  through  the  people  of  this  country. 
Tliere  is  no  power,  1  care  not  whether  it  is  the  power  of  the  rail- 
roads, or  any  other  organized  corporations,  Avhich  can  in  the  end- 
defeat  any  movement  M-hich  is  backed  up  by  the  solid  conservative 
])ul:)lic  opinion  of  the  people  of  this  country.  We  have  been  called 
together  for  a  specific  purpose,  and  that  purpose  is  to  endorse  the 
general  principle  that  this  government  ought  to  exercise  the 
])Ower  which  it  unquestionably  has,  to  supervise,  to  regulate,  and 
to  oversee  tlie  practices  of  the  railroads  of  this  country. 

It  is  not  my  purpose  to  address  you  at  further  length.  Again 
thanking  you,  I  have  now  the  pleasure  of  introducing  to  you 
the  Honorable  Mayor  of  this  city,  ]\Iayor  Dunne." 

]\Iayor  Dunne:  "Mr.  Chairman  and  Gentlemen  of  the  Con- 
vention :  It  is  with  great  pleasure,  both  as  a  citizen  of  this 
city,  and  as  the  chief  executive  of  a  city  of  two  million  people, 
that  I  welcome  you  within  the  doors  of  this  city.  Chicago  is 
especially  desirous  of  welcoming  men  who  meet  for  such  pur- 
poses as  you  have  met  today,  for  the  discussion  of  great  ques- 
tions of  public  importance  that  affect  every  man,  woman  and 
ciiild  ill  ill  is  country.  Chicago,  in  my  judgment,  is  the  nerve 
center  of  America.  Chicago  is  the  cty  which  generally  takes  «the 
initiative  in  the  discussion  of  great  public  problems,  and  from  that 


city  reaches  out  and  throbs  out  througii  the  country  the  opinions 
of  the  people  as  expressed  by  men  who  liavo  independ(Mice  of 
th.ou^ht  and  haw  the  courage  to  express  tliem. 

I  know  of  no  subject  that  is  more  important  to  the  people 
of  this  country  than  the  subject  that  you  are  called  upon  to 
discuss  here  today,  the  question  as  to  what  we  shall  do  with  the 
great  railways  of  this  country. 

There  are  three  classes  of  people  wlio  approach  the  discus- 
sion of  this  subjct,  from  three  different  standpoints.  There 
is  a  class  of  people  in  this  community  which  l)elieves  a  railroad 
should  be  run  like  a  butcher  shop  or  dry  goods  store,  where  the 
owner  of  the  butcher  shop  or  the  dry  goods  store  can  charge 
what  he  pleases  to  each  and  every  one  of  his  customers;  that  he 
can  charge  one  man  a  dollar  a  pound  and  another  one  ten  cents 
a  pound.  There  is  that  class  of  people  in  this  country;  but 
most  of  them,  I  thin]^,  who  hold  to  these  views,  are  men  who 
own  stock  in  the  railroad  companies  of  the  country,  or  are 
affiliated  with  the  people  who  hold  stock. 

There  is  another  class  of  people  in  this  country  whicli  believes 
with  President  Eoosevelt  that  the  great  railway  industries  in 
this  country  must  be  controlled  by  the  government,  and  that  if 
not  controlled  l)y  the  government  they  will  control  the  govern- 
ment. 

There  is  a  third  class  of  people  in  tliis  country- — and  that  is 
not  a  small  class — ^but  it  is  a  class  that  is  growing  from  day  to 
day,  that  numbers  now  in  my  judgment,  millions  of  voters  in 
this  country,  which  believes  that  the  only  way  to  control  the  rail- 
wavs  of  this  countrv  is  to  do  what  a  great  manv  progressive  sox- 
ernments  have  done  in  Europe  and  Australia,  and  tliat  is  to  own 
them.  They  believe  that  governmental  control  upon  its  face 
looks  well,  but  that  when  it  is  practically  worked  out  it  is  a 
failure.  What  my  views  are  I  do  not  care  to  intrude  upon  you 
on  these  matters.  I  simply  say  to  you  that  you  are  called  to 
discuss  a  great,  vital,  living  issue.  I  see  by  the  papers  that 
your  discussions  will  probably  be  animated ;  that  there  is  a  dif- 
ference of  views  among  you,  but  I  know  that  these  discussions 
will  be  carried  out  by  you  gentlemen  with  some  spirit,  at  the 
same  time  good  naturedly,  and  according  to  the  amenities  that 
prevail  among  gentlemen.  T  know  that  you  will  be  bound  by 
parliamentary  rules,  and  will  resort  to  no  other  means  of  ending 
your  discussion.  In  the  first  place,  because  you  look  like  a 
party  of  gentlemen,  and  I  know  you  are,  and  it  is  contrary  to 
the  amenities  that  prevail  between  gentlemen  to  discuss  it  in  any 
other  way.  The  second  reason  is  because  it  is  against  the  ordi- 
nances of  this  city. 

Unfortunately,  I  am  not  able  to  give  you  a  ride  upon  a 
municipal  street  car,  but  I  liope  if  you  convene  here  next  year 
or  the  vear  after  that  we  shall  be  able  to  tender  vou   such   a 


courtesy  from  the  city  of  Chicago.  All  we  own  now  in  the  shape 
of  municipal  vehicles  are  patrol  wagons,  and  I  know  you  won't 
need  those. 

I  trust  that  your  deliberations  will  be  productive  of  much 
good.  The  public  is  watching  this  Convention  with  a  great 
deal  of  interest,  and  I  trust  that  3^ou  will  leave  behind  you  as 
the  result  of  your  discussion  that  which  is  fruitful  of  results 
toward  the  people,  and  that  you  will  carry  away  from  the  city 
of  Chicago  pleasant  recollections  of  your  Convention,  and  pleas- 
ant recollections  of  this  city.     I  thank  you.'" 

The  Chairman  :  "It  is  my  pleasure  to  ask  Governor  Camp- 
bell, of  Ohio,  to  respond  to  the  address  of  welcome  which  the 
Mayor  of  tliis  city  has  just  delivered  to  you.'' 

]\Ii;.  C a:\ipbell:  "Mr.  Mayor,  Your  Honor.  Gentlemen  of 
the  Convention:  I  hear  a  reporter  ask  who  "Governor  Camp- 
bell" is  ?  I  have  been  a  resident  of  Ohio  only  for  about  eighteen 
months.  I  was  formerly  a  railroad  commissioner  of  the  state 
of  Iowa,  and  a  resident  of  the  state  of  Iowa  for  forty-six  years, 
and  Lieutenant-Governor  at  one  time,  and  have  been  engaged  in 
this  railroad  fight  since  1870.  That  is  my  record,  gentlemen. 
I  want  to  introduce  myself. 

On  behalf  of  this  representative  Convention,  Your  Honor,  I 
have  been  called  within  a  few  minutes  to  accept  the  freedom  of 
this  city  and  the  welcome  tendered  by  His  Honor,  the  Mayor, 
to  this  great  representative  body  of  men  who  come  here  repre- 
senting different  organizations,  who  come  here  on  their  own 
responsibilities  from  different  localities  which  sent  them  here 
as  representing  a  great  principle,  to  come  here  to  a  great  Con- 
vention to  express  the  feelings  and  the  intentions  of  the  business 
men  of  this  nation  on  this  question  of  rates.  We  accept  the 
freedom  of  this  city,  and  we  will  try  and  make  ourselves  at  home 
here.  We  are  not  here  for  any  other  purpose  except  the  one 
purpose  that  is  laid  down  in  the  call,  and  that  is  to  endorse  the 
):)osition  of  the  President  upon  this  rate  question.  It  is  extremely 
unfortunate  that  the  great  corporate  interests  of  this  country  have 
seen  fit  to  come  in  here  and  undertake  to  interfere  with  the  de- 
liberate intentions  of  the  people  in  this  matter.  It  is  a  great 
mistake  to  interfere  with  the  people  when  they  ask  for  what  are 
their  actual  rights,  and  that  which  they  are  determined  to  have. 
That  is  as  the  President  of  the  United  States  says,  'fair  play.' 
Wiat  we  want  is  fair  play.  We  are  glad  to  come  to  this  great  city 
of  Chicago,  the  center  of  this  great  nation,  the  great  representa- 
tive city  that  is  interested  in  this  rate  question  perhaps  as  much  as 
any  city  on  the  globe.  West  of  us  in  this  country  today  is  an  empire 
of  people  who  are  under  the  ban  and  the  tyranny  and  the  oppres- 
sion of  the  high  rates  and  the  extortions  and  the  discriminations 


of  the  great  corporations  of  this  country.  They  are  here  today 
from  California,  where  they  are  almost  shut  out  from  the 
markets  of  the  east,  and  where  their  crops  often  rot  because  the 
rates  are  so  high  that  they  cannot  move  them;  while  people  in 
the  east  are  hungry  for  the  products  of  the  west. 

While  the  producers  in  the  west  have  been  at  the  mercy  of 
these  great  corporations,  gentlemen,  this  city  has  gradually 
drifted  into  the  hands  of  men  who  are  affiliated  with  the  cor- 
porations. Some  of  them  are  not  here  today.  They  have  left 
this  city  on  accoimt  of  the  action  of  the  courts.  Some 
of  them  are  under  indictment  today  for  interfering  with  the, 
rights  of  the  people  in  this  matter  of  rates.  Some  of  them 
are  under  indictment  because  they  have  undertaken  to  take  the 
products  of  the  west  and  traffic  in  them  in  an  unlawful  manner, 
and  rob  the  producer  of  that  which  legally  belongs  to  him.  This 
condition  of  things  in  this  city  today  must  be  remedied,  and 
the  commercial  part  of  this  great  city  must  awaken  to  the  fact 
that  if  they  expect  to  hold  their  position  as  the  great  city  of 
the  west,  they  have  got  to  meet  the  producer  on  fair  terms  as 
far  as  rates  are  concerned,  and  leave  the  great  lines  of  transpor- 
tation open  so  that  they  can  reach  this  city.  And  I  say  to 
His  Honor,  the  Mayor  of  the  city  here  today,  that  while  we 
come  here  and  accept  your  welcome,  we  come  here  to  impress 
upon  you  the  fact  that  this  rate  question  vitally  interests  you, 
and  you  must  awaken  to  that  fact  if  you  wish  to  keep  up  your 
intercommunication  with  the  west.  The  great  producers  of  the 
west  are  vitally  interested  in  low  rates,  and  they  will  find  a 
market  if  they  have  to  go  some  place  else  to  get  those  rates. 

Now  in  accepting  the  hospitality  of  this  city  here  today, 
we  recognize  this  is  a  city  of  two  million  people  here.  We 
recognize  the  great  manufacturing  plants.  We  recognize  the  fact 
that  they  have  driven  all  the  great  packing  interests  from  the 
west  in  to  this  city — almost  all.  In  the  state  of  Iowa  when  I 
was  Railroad  Commissioner  of  that  state  years  ago,  we  had 
thirty-two  packing  houses;  today  we  have  but  three  or  four. 
They  were  simply  crushed  out  by  discriminating  rates,  and  their 
doors  were  closed,  and  we  ship  our  hogs  and  our  cattle  to 
Chicago,  and  have  them  manufactured  into  meat,  and  shipped 
back  again  for  consumption,  paying  the  freight  both  ways.  That 
is  the  condition  of  things  in  this  country  today.  That  is  the 
condition  of  things  all  over  this  great  western  country  today. 
That  is  one  of  the  evils  that  we  have  met  here  to  remedy  today, 
to  have  a  fair  show  in  this  fight  for  rates. 

Now,  gentlemen,  this  Convention  has  met  here  today  to 
endorse  the  position  of  the  President.  The  greatest  mistake  that 
could  be  made  is  for  the  corporations  to  fight  the  President  upon 
that  question.  There  is  nothing  so  reasonable  as  the  position 
that  the  President  has  taken  upon  this  question.     The  people 


6 

of  this  coimtrv  want  to  go  further  than  the  President  does,  and 
I  want  to  say  to  yon  that  while  I  do  not  agree  with  my  friend 
tlie  Mayor  as  to  his  position  upon  government  ownership  here, 
we  must  have  government  control  in  this  country  of  these  great 
corporations,  or  the  people  will  take  this  question  in  their  hands 
and  go  further  than  we  want  them  to  go  to-day.  The  position 
of  the  President  upon  tb.is  question  is  moderate.  He  does  not 
go  as  far  as  I  want  to  go  on  this  question,  and  yet  he  has  my 
earnest,  liearty  support  because  he  is  honest  and  earnest  in  his 
efforts  to  secure  to  tlie  people  the  rights  that  tliey  are  entitled 
,to  under  the  constitution  of  this  country. 

Wlieu  this  great  system  of  corporations  laid  its  foundations, 
the  government  and  the  people  gave  them  millions  upon  mil- 
lions of  acres  of  public  lands  to  enable  them  to  build  these  great 
lines  of  transportation,  and  they  conceded  in  those  enactments 
the  right  of  the  public  to  control.  You  will  find  engrafted  in 
the  law  of  many,  many  states  where  these  great  land  grants 
were  accepted,  a  clause  conceding  to  the  people  the  right  to 
control  these  great  corporations.  To-day  they  deny  that  right. 
To-day  tliey  deny  the  simplest  kind  of  control.  To-day  they 
say  to  you,  if  you  want  to  control  these,  that  you  are  a  socialist. 
If  that  is  socialisui,  gentlemen,  count  me  a  socialist.  I  have 
no  sympathy  with  socialism,  ])ut,  my  fellow  citizens,  we  have 
got  to  be  masters  of  the  situation  or  the  corporations  will 
control  this  country,  as  they  arc  trying  to  do  to-day.  They 
have  absolute  control  to-day  of  this  nation  so  far  as  the 
laws  of  transportation  are  concerned.  What  have  you  in 
the  way  of  interstate  power,  gentlemen,  to  control?  The 
Congress  of  the  United  States  eighteen  years  ago  enacted  the 
Interstate  Commerce  Law,  and  they  put  in  that  law  a  clause 
supposed  to  give  to  the  Interstate  Commerce  Commission  the 
power  to  control  rates.  That  was  accepted  by  the  railroads  of 
this  country,  and  under  tliat  for  ten  years  that  body  exercised 
the  functions  of  that  law,  supposing  that  they  had  the  power 
in  that  law  to  control  the  corporations.  But  it  came  to  the 
knowledge  of  some  of  these  corporation  men  that  they  could 
iuipeach  that  right  and  destroy  it,  and  remove  from  that  Com- 
mission the  power  which  they  supposed  they  had.  What  was 
the  result?  They  went  into  the  courts.  The  United  States 
court  found  tbat  the  Commission  did  not  have  the  power  to 
control  rates.  What  was  the  result?  That  power  was  destroyed. 
The  gentlemen  fell  back  on  the  rights  they  claim  now,  that 
there  is  no  power  to  control  rates,  and  they  do  not  want  the 
Commission  to  have  that  power,  and  they  are  not  willing  to 
give  to  any  five  men  or  any  body  of  men  who  are  not  railway 
experts,  the  right  to  make  these  rates.  That  is  their  position. 
They  will  not  concede  even  the  position  that  they  maintained 
for   years   when   this    Commission   was   supposed   to   have   that 


powiT.  and  acted  under  it;  when  the  whole juition  acquiesced  in 
it;  when  the  corporations  conceded  tliat  the  Commission  liad  this 
power.  They  are  not  willing  now  to  accept  that  return  to  that 
position  which  the  President  urges  in  his  message  to  Congress, 
that  thev  shall  have  the  power  that  they  formerly  exercised, 
and  that  was  conceded  hy  this  whole  nation  to  be  right  and 
proper,  a  function  that  they  supposed  they  had  at  that  time,  and 
exercised. 

That  is  what  we  are  here  for  today,  to  urge  that  the  former 
position  and  law — supposed  law  in  this  country,  be  embodied 
there,  and  that  power  over  these  rates  be  granted  to  the  Inter- 
state Commerce  Commission.  That  is  a  very,  very  moderate 
exercise,  gentlemen,  of  the  functions  that  the  people  have. 
These  great  corporations  arc  supreme  at  this  present  time,  when 
the  people  of  this  country  ought  to  be  supreme.  Now  the  ques- 
tion is  whether  we  are  going  to  stand  by  the  President.  This 
Convention  represents  men  who  came  here  with  a  fixed  deter- 
mination, and  that  is  to  vindicate  the  President  upon  that 
question,  and  to  back  him  up  by  the  proper  influence  of  all  these 
great  representative  bodies,  reaching  from  ocean  to  ocean,  and 
from  lakes  to  gulf,  and  to  announce  in  this  Con\'ention  that  they 
are  for  the  President  on  that  question  first,  last  and  all  the 
time. 

We  are  here,  gentlemen,  today,  from  principle,  not  for  per- 
quisites and  passes.  We  are  here  for  the  public  interest,  not 
to  subserve  private  interests.  We  wear  nobody's  collar.  We 
have  nobody's  passes  in  our  pockets.  We  paid  our  way  here.  We 
bear  our  own  expenses.  And  that  is  the  trouble  with  this  Con- 
vention. We  are  here  without  money  and  without  price.  But, 
gentlemen,  I  read  in  your  faces  a  fixed  determination  to  do  your 
duty  regardless  of  threats  of  punishment  or  of  future  reward.  I 
see  in  the  faces  of  this  representative  body  here,  men  who  have  at 
heart  the  interests  of  this  whole  people,  and  the  prosperity  of  the 
commerce  of  this  great  nation.  And  J  want  to  say  to  you  today 
that  we  stand  face  to  face  against  thirteen  billions  of  property 
represented  on  the  other  side;  thirteen  billions  of  property, 
bonds,  stocks  and  railroad  property,  as  estimated  by  the  United 
States  government.  Think  of  the  power  in  the  balance  against 
the  common  American  citizen.  That  is  what  is  in  the  balance 
on  one  side ;  and  on  the  other  side  the  sovereignty  of  the  people, 
wliieh  is  greater  than  all  wealth  and  all  corporations,  and  which 
will  eventually  triumph  on  this  great  question. 

Gentlemen,  in  conclusion  T  want  to  say  in  behalf  of  the 
delegates  to  this  Convention,  to  His  Honor  the  Mayor  of  Chi- 
cago, that  we  accept  his  hospitality ;  we  will  try  and  behave  our- 
selves while  we  are  here.  We  arc  no  'rump.'  Convention.  We 
are  not  the  tail  end  of  anytiiing.  We  are  the  head  and  front  of 
a  great  movement  here,  and  you  will   hear  from   us  Jicreafter." 


8 

The  Chairman.:  "Gentlemen,  I  understand  that  Governor 
Van  Sant,  of  the  state  of  Minnesota,  is  in  the  room.  I  also 
think  that  Senator  Frear,  of  Wisconsin,  is  in  the  room,  and 
Hon.  John  W.  Kern,  of  Indiana.  We  would  be  very  glad  if 
they  would  come  to  the  platform. 

The  next  thing  in  order  will  be  the  reading  of  the  call  for 
this  Convention.  You  have  all  seen  it,  but  in  order  to  have  our 
proceedings  regular,  I  will  ask  the  Secretary  to  read  the  call  for 
this  Convention.    It  is  very  short,  and  will  take  just  a  moment." 

The  Secretary  then  read  the  call  for  the  Convention,  as  fol- 
lows: 

OFFICE   OF   THE    CHAIRMAN    OF   THE   EXECUTIVE    COM- 
MITTEE, INTERSTATE  COMMERCE  LAW  CONVENTION. 

Milwaukee,  Wis.,  Sept.  18,  1905. 

A  convention  of  delegates  representing  the  various  trade, 
industrial  and  producing  interests  of  the  country  is  hereby 
called,  by  the  Executive  Committee  of  the  Interstate  Commerce 
Law  Convention,  held  in  St.  Louis,  Mo.,  October  28  and  29, 
1904,  to  be  held  at  the  Auditorium  Hotel,  at  Chicago,  111.,  to 
meet  at  10  o'clock  a.  m.  on  the  26th  of  October  next,  the  sessions 
to  continue  probably  into  the  following  day.  The  basis  of  repre- 
sentation will  be  one  delegate  for  every  organization  composed 
of  persons  engaged  in  the  pursuits  above  mentioned,  of  one 
hundred  members  or  less,  and  an  additional  delegate  for  each 
additional  two  hundred  members  or  major  part  in  excess  thereof. 

The  object  of  the  Convention  is  to  impress  upon  Congress 
the  extent  and  persistence  of  the  demand  of  the  people  of  all 
parts  of  the  country  for  legislation  outlined  in  the  President's 
last  annual  message  to  Congress  in  the  following  language : 

"The  Interstate  Commerce  Commission  should  be  vested 
with  the  power,  where  a  given  rate  has  been  challenged  and  after 
full  hearing  found  to  be  unreasonable,  to  decide,  subject  to 
judicial  review,  what  shall  be  a  reasonable  rate  to  take  its  place; 
the  ruling  of  the  Commission  to  take  effect  immediately  and  to 
obtain  unless  and  until  it  is  reversed  by  the  court  of  review." 

In  his  address  at  Chautauqua,  N".  Y.,  on  the  11th  of  August 
last,  the  President  declared  his  belief  in  the  immediate  necessity 
for  legislation  "conferring  upon  some  branch  of  the  executive 
government  the  power  of  effective  action  to  remedy  the  abuses 
in  connection  with  railway  transportation." 

The  result  of  the  effort  to  secure  legislation  of  this  character, 
continued   during  the  past  five  years,  seems  likely  to  reach  a 


9 

determination  at  the  coming  session  of  Congress.  The  import- 
ance of  puch  a  demonstration  of  the  public  interest  in  the  legis- 
lation at  this  time  as  will  be  effective  in  its  influence  upon 
Congress  cannot  be  over-estimated,  and  it  is  hoped  that  the 
opportunity  presented  by  the  Convention  for  this  purpose  will 
be  utilized  by  the  sending  of  delegates  thereto  by  every  organiza- 
tion desirous  of  the  enactment  of  such  legislation. 

The  railway  interest  is  unitedly  opposed  to  any  legislation 
restricting  its  absolute  control  of  railway  rates,  and  the  repre- 
sentatives of  that  interest  throughout  the  country  are  not  only 
exerting  their  utmost  influence  witli  Congress  to  prevent  legisla- 
tion in  this  direction,  but  are  mal-cing  strenuous  efforts  to  sup- 
press expression  of  sentiment  in  its  favor  on  the  part  of  com- 
mercial organizations,  and  also,  by  perverting  the  intent  and 
purpose  of  the  legislation,  to  incite  opposition  thereto  on  the 
part  of  such  organizations.  Hence,  it  is  necessary  for  the  friends 
of  the  legislation  to  avail  themselves  of  every  means  of  making 
their  influence  felt  where  it  will  have  effect  in  bringing  about  its 
enactment. 

The  names  and  addresses  of  delegates  appointed  to  the  Con- 
vention should  be  forwarded  promptly  to  the  undersigned  at 
Milwaukee,  Wis. 

Truly  yours, 

E.  P.  Bacon,  Chairman. 

A  supplementary  call  was  issued  September  25th,  in  pur- 
suance of  a  vote  of  the  Executive  Committee,  extending  the  con- 
stituency of  the  Convention  to  embrace  a  representative  from 
each  congressional  district,  to  be  appointed  by  the  Governors 
of  the  respective  states,  with  reference  particularly  to  their  repre- 
senting the  producing  interests  of  their  several  districts.  In  other 
respects  the  language  of  the  call  was  identical  with  that  used  in 
the  original  call. 

The  Chairman  :  '"In  order  to  perfect  our  organization,  gen- 
tlemen, it  is  necessary  that  we  have  two  committees  appointed, 
a  Committee  on  Permanent  Organization,  and  a  Committee  on 
Credentials.  And.  just  one  word  in  relation  to  the  Committee 
on  Credentials.  You  all  know  that  we,  the  Executive  Com- 
mittee, were  compelled  to  adopt  a  procedure  this  morning  which 
was  somewhat  unusual.  That  procedure  was  not  intended  in 
any  way  to  limit  the  discussion  of  the  gentlemen  present  who 
might  wish  to  offer  resolutions  and  to  discuss  them  upon  the 


10 

principles  emliodied  in  the  call  for  this  Convention,  and  at  the 
proper  time  an  opportunity  will  be  given  for  resolutions  to  be 
offered,  and  for  the  freest  kind  of  open  discussion,  provided  the 
discussion  is  confined  to  the  purpose  stated  in  the  call  of  the 
Convention.  If  some  gentleman  will  be  kind  enough  to  move 
the  a]ipointment  of  these  two  committees  T  will  thank  him." 

A  motion  was  offered  to  appoint  a  Committee  on  Permanent 
Organization  and  a  Committee  on  Credentials,  and  unanimously 
carried. 

The  Chairman:  ^' While  the  committees  are  being  made  up, 
I  am  going  to  introduce  to  you  a  gentleman  who  is  probably  well 
known  to  all  of  you,  who  \\dthin  the  last  twenty-four  hours  has 
been  engaged  in  a  fight  for  this  cause,  in  the  head  and  front, 
at  the  place  where  the  opposition  to  this  Convention  had  its 
inception,  and  he  has  won  by  a  vote  of  ten  to  one.  I  have  the 
pleasure  of  introducing  to  you  Hon.  John  W.  Kern,  of  the  state 
of  Indiana." 

"I  wish  to  read  a  telegram  which  has  just  been  placed  in  my 
hands,  and  tlie  name  signed  to  it  is  known  to  every  one  of  you:" 

"Judge    S.    H.    Cowan,    Steinway   Hall    Convention,    Chicago, 
Illinois  : 

Hope  the  Convention  will  resist  to  the  utmost  the  admis- 
sion of  any  delegate  who  will  not  sign  the  proposed  pledge.  Let 
the  railroad  hired  men  exhibit  their  free  passes  and  go  home. 
If  they  outnumber  you  by  violence,  go  elsewhere  and  hold  a 
Eoosevelt  Convention. 

(Signed)    William  E.  Chandler."'' 

(P'ormer  Senator  from  the  state  of  !N^ew  Hampshire.) 

Hon.  John  W.  Kern:  "Mr.  Chairman  and  Gentlemen  of 
the  Convention :  I  am  commissioned  by  the  Commercial  Club 
of  Indianapolis,  the  largest  commercial  organization  in  that 
.commonwealth,  to  come  here  and  declare  to  this  Convention 
that  the  people  of  Indiana,  regardless  of  any  party  affiliations, 
stand  like  a  stone  wall  in  favor  of  the  position  of  the  President 
of  the  United  States. 

I  have  been  requested  to  briefly  state  an  account  of  the  con- 
test recently  had  in  the  city  of  Indianapolis  on  this  question. 
T])e  Commercial  Club  lias  twelve  hundred  members.  The  mem- 
bership consists  of  the  flower  of  Indianapolis'  business  citizen- 


11 

sliip.  It  has  a  directorv  of  fifteen  members.  Some  time  ago,  in 
n'sj)ons(^  to  the  call  issued  bv  the  chairman  of  your  Executive 
Ct)mmittce,  the  Board  of  Directors  appointed  delegates  to  this 
Convention  and  instructed  them,  on  motion  of  myself,  to  stand 
by  the  President  when  they  came  here  to  represent  the  club.  Our 
very  esteemed,  highly  respected  follow  townsman,  Mr.  D.  M. 
I'aiTy,  who  is  also  a  member  of  the  Board  of  Directors  of  that 
club,  was  not  present  at  that  meeting.  At  a  subsequent  meeting 
lie  made  complaint  that  the  Board  of  Directors  should  not  have 
exercised  that  sort  of  authority.  In  order  that  Mr.  Parry  might 
be  accommodated,  that  he  and  his  friends  might  have  the  fullest 
opportunity  to  present  their  views,  the  Board  of  Directors  called 
a  meeting  of  the  membership  of  the  club  to  settle  the  matter  for 
themselves,  and  on  tW  night  liefore  last,  when  the  membership 
met,  there  were  present  very  numy  faces  which  had  not  been 
seen  there  before  in  vears.  Everv  railroad  man  who  belonged 
to  the  clul)  sprang  forward  to  take  part  in  the  exercises  of  that 
evening.  Mr.  Parry  was  there  in  all  his  glory,  with  all  the 
friends  he  could  rally  about  him.  After  a  very  full  and  free 
discussion  of  all  sides  of  this  question,  when  a  vote  was  finally 
taken  it  was  more  than  ten  to  one  in  favor  of  standing  with  the 
President  on  this  question.  And  it  was  the  expression  of 
the  club  that  men  who  did  not  agree  with  the  Presi- 
dent, who  were  interested  in  the  maintenance  of  the  present 
railroad  rates,  had  no  more  place  in  this  Convention  than  a  free 
trade  Democrat  would  have  in  a  high  protective  Eepublican 
convention.  T  think  it  was  demonstrated  in  Indianapolis  the 
other  night  that  while  everybody  regards  Mr.  Parry  as 
a  very  agreeable  gentleman,  as  a  very  useful  citizen,  of  great 
use  to  the  community  as  one  of  our  leading  manufacturers, 
yet  they  have  no  sympathy  with  him  whatever  in  his  present 
attitude  on  the  public  questions  that  are  now  agitating*  the 
country. 

I  am  not  here  to  detain  you  long.  But  I  venture  to  say  this 
further,  that  in  the  strictest  sense  I  am  a  Democrat.  Twice  in 
the  past  eight  years  I  have  carried  my  party's  banner  in  Indiana 
— to  defeat,  to  be  sure, — hut  I  have  carried  the  banner  as  hon- 
orably and  l)ravely  as  I  knew  how.  When  President  Eoose- 
velt  was  inaugurated,  I  had  some  doubts,  of  course,  as  a  partisan 
naturally  would  have.  I  had  some  doubts  of  him.  I  have  watched 
his  every  step  since  his  inauguration  as  President,  and  I  am 
here  to  declare  to  you  gentlemen  today,  as  a  Democrat,  that  in 
my  judgment  no  President  of  the  United  States  since  the  days 
of  (}eorge  "Washington  has  had  such  a  united  support  on  the 
part  of  all  the  people  of  the  United  States  as  Theodore  Roosevelt. 

(At  the  request  of  Mr.  Campbell,  the  audience  rose  and  gave 
three  cheers  for  President  Roosevelt.) 


12 

Mr.  Eoosevelt  has  demonstrated  his  ability  to  rise  above  and 
out  of  the  party  atmosphere,  to  get  away  from  party  lines;  to 
step  up  from  party  platforms  to  that  broader,  higher  platform 
of  American  patriotism,  and  be  a  President  of  all  the  people. 

And  I  think  it  is  one  of  the  most  hopeful  signs  of  the  re- 
public that  at  this  hour  men  of  all  parties  have  for  the  moment 
forgotten  their  political  differences,  forgotten  the  differences 
on  mere  abstract  propositions,  and  questions  of  economy,  on 
questions  of  finance,  and  are  only  mindful  that  it  is  the  duty 
of  the  great  body  of  American  citizenship  to  uphold  the  hands 
of  the  President  of  the  United  States  in  this  mighty  struggle 
in  which  he  is  engaged. 

My  friend  has  spoken  of  the  great  power  of  corporations,  of 
the  thirteen  billions  of  dollars  which  they  .represent.  They  have 
great  power.  They  undertook  to  exert  that  power,  I  under- 
stand, by  sending  men  here  to  disturb  this  Convention  of  the 
people  in  the  expression  of  its  views.  These  men  should  remem- 
ber that  while  they  have  great  power,  power  not  hitherto  known, 
perhaps,  in  the  history  of  this  or  any  other  country,  yet  there 
is  in  this  republic  a  still  greater  power,  a  power  that  is  about 
to  manifest  itself;  it  is  the  power  before  which  kings  have 
trembled  and  before  which  emperors  have  gone  down.  It  is 
the  poMer  of  public  opinion.  It  is  the  power  that  is  behind  the 
awakening  of  the  public  conscience.  It  is  the  power  that  means 
now  and  in  this  administration  to  bring  to  the  people  of  this 
country  their  own,  and  to  stamp  out  all  those  forms  of  anar- 
chistic opposition  to  the  rights  of  the  people  which  are  repre- 
sented by  men  who  are  in  Chicago  today  for  the  purpose  of  dis- 
turbing this  Convention.     Gentlemen,  I  thank  you." 

The  Chairman  :  "In  accordance  with  your  resolution,  gen- 
tleinen,  the  Chair  appoints  the  following  committees: 


COMMITTEE  ON   PERMANENT   ORGANIZATION. 

Judge  S.  H.  Cowan,  Fort  Worth,  Tex.  (Chairman). 

Mr.  C.  W.  Robinson.  Meridian,  Miss. 

Mr.  R.  H.  West,  Cincinnati,  0. 

Mr.  William  B.  Stillwell,  Savannah,  Ga. 

Capt.  J.  A.  Farley,  Dallas,  Tex. 

Mr.  E.  F.  Perry,  New  York  City. 

This  committee  will  meet  in  Room  423  of  the  Auditorium 
Hotel  immediately  upon  the  adjourning  of  this  meeting. 


13 

COMMITTEE   ON    CREDENTIALS. 

Mr.  J.  E.  Howard,  Wichita,  Kan.  (Chairman). 

J.  H.  Johnston.  Oklahoma  Cit}^,  Okla. 

F.  Q.  Story.  Los  Angelos.  Cal. 

I.  P.  Eimisey,  Chicago,  111. 

Frederick  R.  Babcock,  Pittsburg,  Pa. 

:\r.  P.  Buel,  Chicago,  Ills. 

Thomas  A.  Gray,  Grinnell,  la. 

L.  C.  Slade,  Saginaw,  Mich. 

E.  D.  Conger,  Grand  Rapids,  Mich. 

And  a  delegate  from  each  state  not  already  named  on  the 
committee,  which  I  have  just  read  to  you,  so  that  every  man  who 
is  entitled  to  a  seat  in  this  Convention  may  have  an  opportunitv 
to  be  represented.  That  committee  will  meet  in  this  room 
immediately  upon  the  adjournment  of  the  morning  session.  And 
we  hope  that  every  man  whose  credentials  have  not  already 
been  presented,  will  take  that  opportunity  to  present  them  to  this 
committee. 

I  am  about  to  introduce  to  you  a  gentleman  whom  you  will 
all  be  glad  to  hear,  and  I  would  suggest  to  you  that  the  names 
of  members  of  the  Committee  on  Credentials  from  each  state  be 
written  upon  a  piece  of  paper  and  handed  to  the  Secretary  imme- 
diately upon  the  adjournment,  which  will  take  place  at  the  con- 
clusion of  an  address  to  be  delivered  to  you  by  Ex-Governor 
Van  Sant,  of  the  state  of  ]\Iinnesota." 

Hex.  S.  R.  Van  Sant:  "Mr.  Chairman  and  Gentlemen  of 
the  Convention :  There  is  no  ambiguity  in  the  call  for  this 
Convention.  We  know  what  we  are  here  for,  and  what  we  want. 
Xo  call  was  ever  more  plainly  stated.  We  do  not  come  here  as 
the  enemies  of  the  railroads.  We  do  not  stand  with  pick  axe 
and  crow  bar  in  hand  to  tear  up  their  tracks.  Time  will  demon- 
strate that  we  are  their  friends,  and  in  my  judgment  they  make 
a  great  mistake  to  oppose  so  fair  and  just  a  measure  as  the 
legislation  whicli  we  propose.  And  I  furthermore  think  that 
they  will  give  great  impetus  to  our  movement  by  the  opposition 
which  they  have  inaugurated.  All  that  the  American  people 
need  is  to  be  thoroughly  aroused,  and  their  action  will  arouse 
them  ten  times  more  than  ours. 

Gentlemen,  I  said  we  were  the  friends  of  the  railroads. 
There  are  manv  who  believe  that  if  this  wise  action  does  not 


14 

prevail  government  ownership  will  follow.  I  hope  it  may  not, 
but  to  show  that  I  voice  the  sentiment  of  men  who  have  given 
this  subject  great  study,  1  desire  Just  for  a  moment  to  quote 
from  one  of  the  Interstate  Commerce  Commissioners.  Mr. 
Prouty,  a  member  of  the  Interstate  Commerce  Commission, 
recently  said: 

"There  will  be  either  government  ownership,  or  government 
regulation  of  the  railroads.  Wliich  it  will  be  depends  mainly 
on  the  managers  of  the  railroads.  If  they  do  not  Avant  government 
ownership  they  will  cease  their  opposition  to  the  President's 
plan  for  preventing  the  enforcement  of  rates  which  are 
unreasonable." 

All  railway  men  are  not  of  the  same  mind.  One  of  the 
ablest  railroad  presidents  said  in  an  interview  recently  that: 

"The  government  should  either  own  and  operate  the  rail- 
ways or  supervise  and  regulate  their  management.  The  latter 
plan  I  think  wiser  and  to  be  preferred.  The  railroads,  after 
all,  are  as  much  the  subject  of  government  control  as  the  public 
highways." 

Another  railroad  president  stated  about  the  same  time: 

"Legislation  on  the  railroad  question  is  inevitable,  and  the 
railroads  must  be  prepared  for  it."" 

The  views  of  these  men  are  worthy  of  consideration.  They 
have  had  years  of  experience  and  should  be  thoroughly  informed. 
You  cannot  disgiiise  the  fact  it  is  either  government  ownership 
or  government  regulation.  We  do  not  want  the  former ;  we  must 
have  the  latter.  All  agree  that  the  railroads  are  absolutely  essen- 
tial and  have  been  mighty  factors  in  producing  the  wonderful 
groA\d;h  and  development  of  our  country.  The  railroad  is  essen- 
tial. It  never  should  be  permitted  to  become  a  monopoly.  They 
sliould  have  fair  treatment,  and  receive  proper  compensation 
for  their  services.  Have  they  been  treated  fairly?  Let  us  just 
for  a  moment  examine.  It  has  been  announced  that  I  am  from 
^Minnesota.  In  that  great  North  Star  state,  there  has  been 
donated  by  that  commonwealth  to  the  railroads  of  the  state 
10,500.000  acres  of  land;  more  acres  today  than  all  the  farmers 
of  that  commonwealth  are  handling.  Is  not  this  generous  treat- 
ment ?  Xor  does  this  include,  mv  fellow  citizens,  the  rights  of  wav 
given.  It  does  not  include  bonuses  by  toA^mships  and  cities.  In 
fact,  they  have  practically  given  them  enough  to  build  the  rail- 
ways of  that  state.  That  is  not  all.  The  general  government 
in  Minuesota  has  sfiven  beside  this  10,500,000  acres  of  land. 
$10,000,000.  Does^t  not  follow  that  they  should  be  just  and 
generous  in  their  treatment  of  the  people  of  that  state,  and  other 
states  who  have  treated  them  in  a  similar  manner.  That  is  all 
thero  is  to  this  question,  and  that  is  wliat  we  are  contending  for 
todav. 


i:. 


rp  1 


lit'  rati'  question  will  not  down.  That  it  will  not  is  in  a 
lar^c  inoasurc  due  to  this  or<:anization.  Great  credit  is  due 
to  Mr.  Eaeou  and  those  conueeted  with  iiim  J'or  the  persistent 
firlit  thev  have  i)ut  up  on  the  question  of  railway  repmlations. 
'"J'o  say  tliat  it  is  an  important  question  is  to  state  it  mildly.  It 
is  the  paramount  question  today  hefore  the  American  people. 
It  affects  every  nmn,  woman  and  child  in  the  United  States. 

What  is  a  freight  rate  ?  "A  freight  rate  is  a  tax  upon  every- 
thing that  enters  into  the  life  and  prosperity  of  a  community," 
and  heing  sucli,  it  is  an  important  question.  Is  it  necessary  to 
state  that  unreasonable  rates  exist,  and  that  discriminations  are 
found?  Judging  by  the  appearances,  and  looking  into  your 
intelligent  faces,  I  think  this  audience  needs  nothing  of  the 
kind.  But  let  me  say  that  this  city  of  Chicago  and  the  cities 
from  which  T  come.  St.  Paul  and  Minneapolis,  are  discriminated 
against.  The  freight  rate  is  the  same  from  New  York  to  San 
Francisco  as  it  is  from  these  cities.  This  is  a  matter  subject  to 
prdof.  Is  it  reasonable  then  that  people  living  in  these  com- 
munities should  be  willing  to  he  put  upon  such  a  basis  as  that? 
I  think  not.  There  is  a  gentleman  sitting  in  this  room  as  a 
delegate  to  this  Convention,  and  I  am  about  to  quote  something 
he  said  before  the  Municipal  League  Convention,  showing  that 
discrimination  is  conimon  not  only  against  cities  but  against 
individuals.     And  here  is  what  he  said  : 

'Tn  the  first  place  I  will  call  your  attention,""  says  Mr. 
Loftus,  "to  a  special  rate  enforced  here  (Minneapolis)  and  the 
head  of  the  lakes.  Certain  of  our  large  elevator  concerns  enjoy 
a  s])ecial  rate  on  grain  from  Minneapolis  to  Duluth  of  3I/2  cents 
per  1(10,  while  the  tariff  is  fiv(^  cents,  which  amount  you  or 
myself  are  compelled  to  pay."  (He  is  in  the  elevator  business.) 
"The  Great  Northern  Eoad  has  been  carrying  grain  from  Min- 
neapolis to  Duluth  for  21/4  cents  per  100.  That  is  one-half  the 
taritf  rate,  and  is  only  enjoyed  by  three  of  the  larger  line  elevator 
companies  who  have  tlie  good  fortune  to  be  on  the  inside." 

He  gives  the  numbers  of  the  vouchers  and  the  car  numbers 
to  sulistantiate  what  he  says,  and  gives  one  item  of  rebate 
amounting  to  $92,006.76,  given  by  one  road.  Can  it  be  pos- 
sible, gentlemen?  Is  this  a  country  where  a  man  has  equality 
of  opportunity?  Not  so  when  it  comes  to  railroad  rates.  No 
nuin  should  be  allowed  to  enjoy  special  privileges  over  his  neigh- 
bor. No  good  citizen  should  want  to  have  such  undue  advantage 
over  his  neighbor.  No  combination  should  have  it  in  its  power 
to  build  up  one  city  and  ruin  another;  to  enrich  one  individual 
and  pauperize  another. 

It  is  quite  the  proper  thing  now-a-days,  to  deride  and  abuse, 
if  you  can  abuse.  John  D.  Eockefeller.  Blame  yourselves.  Don't 
blame  the  conditions,  but  change  them.  You  have  it  in  your 
jjower.      And    when    1    think    of    the    condition    of    the    coun- 


16 

try  today  and  read  the  insurance  scandals  that  are  taking  the 
money  from  poor  people  who  have  given  up  the  luxuries  of 
life  to  provide  for  those  who  are  left  behind  them;  when  I 
consider  the  graft  in  Philadelphia,  the  great  fight  made  in 
St.  Louis,  and  the  cry  from  cities  ever}^here,  I  think  of  little 
Phil  Sheridan  and  what  he  once  said  to  one  of  his  colonels. 
He  was  hard  pressed  in  one  of  the  campaigns  in  Virginia,  and 
a  colonel  came  up  and  said,  "Where  shall  I  get  into  the  fight  ?" 
He  said,  "Get  in  anywhere.  There  is  good  fighting  all  along 
the  line." 

So  there  is  good  fighting  all  along  the  line  now,  and  when 
you  go  to  your  homes  don't  stop  until  your  neighbors  know  what 
you  mean,  and  what  we  have  been  doing  here,  and  let  zeal 
prevail,  and  good  results  will  follow. 

That  the  rates  charged  are  unreasonable,  and  increasing,  I 
propose  to  bring  proof,  and  proof  that  to  me  is  sufficient,  and 
again  I  hope  you  will  pardon  me  for  reading.  This  is  a  report 
of  tlie  Interstate  Commerce  Commission: 

"One  of  the  most  significant  things  in  recent  railway  opera- 
tion is  the  steady  advance  in  the  cost  of  the  transportation  of 
freight  by  rail.  A  few  years  ago  the  impression  was  general 
that  freight  rates  could  not  and  would  not  be  advanced.  Eail- 
way  traffic  officials  frequently  affirmed  this  in  testimony.  When 
the  Commission  had  under  consideration  certain  consolidations 
of  railway  property,  the  eminent  gentlemen  who  had  brought 
them  about  stated  under  oath  that  the  purpose  was  not  to  ad- 
vance, but  rather  to  reduce  rates.  Eecent  history  belies  these 
predictions.  This  increase  in  the  transportation  charge  has  been 
accomplished  in  various  ways." 

What  is  the  remedy?  Your  Convention  opens  the  way.  I 
agree  with  you  that  we  must  look  to  Congress  for  redress.  Addi- 
tional power  should  be  given  the  Interstate  Commerce  Commis- 
sion along  the  lines  suggested  by  the  President  in  his  last  mes- 
sage to  Congress.     He  says : 

"The  Interstate  Commerce  Commission  should  be  vested 
with  the  power,  where  a  given  rate  has  been  challenged,  and  after 
a  full  hearing  found  to  be  u-nreasonable,  to  decide,  subject  to 
judicial  review,  what  shall  be  a  reasonable  rate  to  take  its  place ; 
the  ruling  of  the  Commission  to  take  effect  immediately,  and 
to  ol)tain  unless  and  until  it  is  reversed  by  the  Court  of  Review." 

This  is  sound  doctrine.  In  urging  such  just  and  wise  .legis- 
lation you  are  standing  with  the  President  of  the  United  States 
and  a  large  majority  of  the  American  people. 

I  am  in  hearty  sympathy  with  your  movement.  This  is  no 
sudden  impulse.  I  have  advocated  it  for  years.  At  a  conference 
of  Western  Governors  at  Helena,  Montana,  in  1901,  after  agree- 
ing to  stand  unitedly  together  to  resist  the  "merger"  of  the  two 
great   parallel  and  competing  lines  of  railway    (the   Northern 


17 

Pacific  and  the  Great  jSTortliern)  in  violation  of  law,  wo  passed 
the  following  resolution,  fully  realizing  the  necessity  for  further 
legislation,  even  if  the  threatened  consolidation  was  prevented 
by  a  decree  of  the  courts. 

"That  power  should  be  granted  to  the  Interstate  Coniinerce 
Commission  to  fix  maximum  rates  upon  interstate  traflic  and 
to  regulate  the  same." 

The  decision  of  the  Supreme  Court  of  the  United  States  in 
the  merger  suit  was  most  wholesome.  It  was  received  with  joy 
throughout  the  Union.  It  prevented  the  most  ingenious  scheme 
ever  attempted  to  stifle  competition  and  promote  monopoly.  It 
was  a  triumph  of  law  and  has  settled  for  all  time  the  power  of 
the  government  to  prevent  the  illegal  combination  of  transporta- 
tion companies  in  restraint  of  trade.  There  will  be  no  open 
mergers.  However,  efforts  are  being  made  to  do  indirectly  what 
the  courts  will  not  permit  directly.  Many  lines  arc  being  united 
into  systems  and  then  the  systems  are  grouped.  In  this  way  a 
few  men  practically  control  the  transportation  companies  of  the 
country. 

By  means  of  this  grouping  process  a  few  railroad  magnates 
can  meet  in  N^ew  York  and  agree  upon  plans,  and  put  into 
effect  policies  w^hich  will  result  in  their  especial  benefit,  and 
detrimental  to  shippers  and  the  public.  Six  of  these  groups 
or  svstems  are  said  to  control  178,000  of  the  204,000  miles  of 
the  railroad  mileage  of  the  United  States.  By  this  means  com- 
petition has  been  destroyed  and  the  necessity  for  rate  regulation 
has  become  more  and  more  apparent. 

This  proposed  regulation  by  Congress  will  result  in  no  injus- 
tice to  either  shipper  or  carrier.  Let  the  question  be  stated 
fairly.  It  is  not  to  make  rates,  as  often  claimed  by  the  opponents 
of  the  measure;  not  at  all.  The  railroads  should  do  this.  They 
should  properly  take  the  initiative.  All  that  is  desired  is.  that 
after  complaint  is  made,  and  after  a  thorough  investigation, 
both  shipper  and  carrier  having  been  heard,  if  the  rate  is  then 
found  to  be  unreasonable,  the  Commission  shall  name  a  reason- 
able one  to  take  its  place,  said  rate  to  go  into  effect  immediately 
and  remain  in  force  until  the  question  is  finally  passed  upon  by 
the  courts. 

For  ten  years  after  the  passage  of  the  law  the  Coniinission 
exercised  this  power,  and  no  objection  was  heard  ;  all  ])arties 
acquiesced  in  its  decisions.  During  these  j-ears  the  law  worked 
well.  In  some  cases  the  railroads  asked  that  this  power  be 
exercised  in  contentions  where  they  were  mutually  interested. 
Some  four  hundred  cases  w'cre  adjusted  without  any  adverse 
criticism. 

In  1897  the  Supreme  Court  decided  (by  a  divided  court, 
however)  that  Congress  had  not  conferred  upon  tlie  Coiuiuission 
tiie  power  to  fix  a  rate.     This  for  all  practical  ])urposes  made 


18 

the  law  valueless  except  for  the  purpose  of  collecting  data  and 
giving  publicity  to  facts.  Since  that  time  the  Commission 
could  hold  meetings  and  decide  contests,  but  it  could  not  remedy 
the  evil  complained  of.  The  railroads  could  do  as  they  pleased, 
■as  there  was  no  power  to  enforce  their  decrees. 

That  this  statement  is  true  I  quote  from  the  report  of  the 
■Commission : 

"We  desire  to  repeat  in  this  connection  that  there  is  today 
no  way  in  which  these  advances  can  be  prevented.  If  they  are 
just  and  reasonable  they  ought  not  to  be  prevented ;  but  it  cannot 
be  assumed  that  they  are  in  all  cases,  and  it  is  impossible  to 
contemplate  with  equanimity  the  fact  that  the  result  of  all 
recent  improvement  in  transportation  facilities,  that  the  conse- 
quence of  financial  prosperity  and  financial  adversity  alike,  is 
an  increase  in  the  transportation  charge,  or  to  remember  with 
indifference  that  this  species  of  property  is  now  in  position  to 
tax  unjustly  every  other  species  of  property.  If  these  charges 
are  unreasonable  they  form  a  most  insidious  means  of  taking 
unjustly  from  the  general  body  of  the  public  for  the  benefit  of 
a  few.  At  present  this  Commission  can  investigate  and  report. 
It  has  no  power  to  determine  what  rate  is  reasonable,  and  such 
orders  as  it  can  make  have  no  binding  effect." 

To  continue  this  Commission  with  no  power  to  enforce  its 
findings  is  a  farce.  The  farce  might  as  well  end.  Either  give 
the  power  required  and  essential  to  make  the  decisions  of  the 
£!ommission  effective  or  abolish  it  altogether. 

I  congratulate  you  that  the  long  fight  is  about  to  end.  A 
'determination  will  be  reached  during  the  next  session  of  Con- 
gress. You  do  well  to  call  this  meeting  to  arouse  public  senti- 
ment. The  conflict  will  soon  be  on  in  all  its  fury.  The  weak- 
kneed  and  timid  might  as  well  retire  to  the  rear  at  once.  Can 
a  successful  fight  be  made?  Yes,  but  it  will  be  after  a  terrible 
conflict.  The  interests  opposed  will  fight  to  a  finish.  They 
are  strongly  intrenched,  and  will  not  surrender  until  forced 
to  do  so.  Let  us  accept  the  gage  of  battle.  Let  is  be  settled  now 
whether  the  railroads  are  our  servants  or  our  masters.  We  con- 
tend that  the  railroad  is  the  creature  of  the  state.  Let  it  be 
definitely  and  immediately  understood  whether  the  people  exist 
for  the  railroads  or  the  railroads  for  the  people.  In  a  word,  let 
it  be  definitely  determined  whether  this  is  a  government  by  the 
people  or  a  government  by  the  corporations. 

President  Roosevelt  made  a  speech  recently  in  Philadelphia. 
It  was  a  master  piece  most  worthy  of  the  man.  Amongst  other 
things  he  said : 

"Neither  this  people  nor  any  free  people  will  permanently 
tolerate  the  use  of  the  vast  power  conferred  by  vast  wealth, 
especially  by  wealth  in  its  corporate  form,  without  lodging  some- 
where in  the  government  the  still  higher  power  of  seeing  that 


19 

this  power,  in  addition  to  being  used  in  the  interest  of  the 
individual  or  individuals  possessing  it,  is  also  used  for  and  not 
against  the  interest  of  the  people  as  a  whole." 

The  President  is  right.  The  people  will  not  long  permit 
the  misuse  of  the  vast  power  of  corporate  wealth.  A  free  people 
will  not  long  submit  to  the  tyranny  of  its  creatures.  The  time 
has  come  to  call  a  halt.  The  great  trusts  and  corporations  exist, 
in  fact  their  very  life  depends  upon,  the  special  privileges  granted 
by  the  great  railway  systems.  When  you  talk  of  any  remedy, 
their  cry  is,  it  will  injure  business  interests.  The  same  old 
song,  whenever  reforms  are  proposed,  it  will  destroy  liberty, 
they  say.  The  only  liberty  that  would  be  endangered  would  be 
the  liberty  now  enjoyed  by  certain  corporations  to  rob  the  public. 
"It  is  unconstitutional,"  they  maintain.  It  has  always  been 
deemed  right  to  regulate  common  carriers.  Evidently  they  do 
not  agree  with  Justice  Brewer,  who  says,  "The  superintending 
power  over  highways  and  the  charges  imposed  upon  the  public 
for  their  use  always  remains  in  the  government."  It  is  evident 
that  all  these  magnates  desire  is  to  be  let  alone.  If  these  mag- 
nates are  permitted,  after  every  wave  of  prosperity  passes  over 
the  country,  to  water  their  stock  and  place  new  burdens  upon 
the  people,  they  will  be  satisfied. 

Are  we  in  earnest?  Do  we  really  want  these  evils  to  cease? 
If  so  we  have  the  power  in  our  hands.  In  our  country  the 
people  rule.  Xo  force  so  irresistible  as  an  aroused  public  senti- 
ment. No  man  can  detect  its  rumblings  sooner  than  the  public 
official.  He  ever  has  his  ear  to  the  ground  and  he  can  trim 
his  sails  on  short  notice,  so  that  his  political  craft  can  safely 
weather  the  threatened  storm.  A  gi'eat  tidal  wave,  representing 
public  opinion,  has  rolled  into  Washington.  The  lower  house 
heeded  its  warning.  It  is  striking  Avitli  terrific  force  against 
tlie  senate  walls,  and  that  august  body  too  must  yield  to  the 
public  demand. 

Let  us  hope  that  the  extended  inquiry  before  the  Senate 
Committee  may  hasten  its  action  and  give  us  the  desired  legis- 
lation. The  voluminous  report  is  in  print.  I  liave  read  it  with 
much  interest  and  profit.  I  have  observed  that  in  most  cases, 
large  shippers,  jobbers  and  manufacturers  located  in  great  dis- 
tributing centers,  who  have  been  able  to  buy  cheap  transporta- 
tion in  the  past  ("buying  transportation"  is  not  quite  so  dis- 
reputable just  now  as  securing  rebates)  are  very  mucli  opposed 
to  granting  any  increased  power  to  the  Interstate  Commerce 
Commission.  They  are  at  least  to  be  admired  for  one  tiling. 
Having  received  favors  and  great  favors  they  do  not  propo.se  to 
desert  the  railroads  when  they  are  hard  pressed.  They  would 
be  ingrates  if  they  did.  But  let  them  stop  there.  They  should 
not  speak  for  others,  and  assert  that  the  people  are  satisfied  with 
existing  rates.     In   Minnosntn    tlioy   are   not.      'I'hoso   mon    ;irn 


30 

xovy  solicitous  about  the  man  behind  the  ploAV — and  the  pro- 
ducer in  general.  But  what  interest  have  they,  after  securing 
their  own  tran^^portation  and  fillint;,'  up  tlieir  warehouses,  in  the 
rates  given  the  farmer  and  small  merchant? — none  at  all.  The 
farmer  and  merchant  are  aware  of  this  fact,  and  propose  to 
stand  it  no  longer.  The  complaint  comes  from  the  unreasonable 
rate  charged  upon  hundreds  and  thousands  of  cars  of  merchan- 
dise going  to  the  consumers  throughout  our  state.  When  com- 
plaints are  made  the  railroad  officials  inform  the  people  that  if 
the  rates  were  too  high  the  big  city  shippers  would  object.  As 
stated,  what  interest  have  they  in  outgoing  rates.  Tlieir  only 
solicitude  is  in  getting  their  goods  at  a  low  price  from  the  east, 
and  as  they  have  bought  their  transportation  in  a  competitive 
market,  they  are  not  losing  any  sleep  over  freight  charges  to 
the  outlying  districts.  These  outlying  districts  are  beginning 
to  understand  the  facts  and  propose  to  have  a  change.  They  are 
beginning  to  make  comparisons,  to  see  if  they  are  fairly  treated. 
Tliey  have  discovered  that  they  have  been  discriminated  against. 
They  look  across  the  border  into  Iowa,  and  find  on  close  exam- 
ination that  the  people  of  that  commonwealth  are  more  highly 
favored.     Let  us  see. 

Take  the  report  of  the  Railway  Commissioners  in  Iowa  for 
the  year  ending  November  30,  1903,  and  the  report  for  the  same 
length  of  time  of  our  Commissioners  ending  June  30,  1903. 
In  our  state  at  that  time,  in  round  numbers  we  had  7,250  miles 
of  railway,  in  Iowa,  9,500.  In  Iowa  gross  earnings, 
$57,159,9S3  ;  in  our  state,  $68,051,499.  Operatmg  expenses  in 
Minnesota,  $32,303,296;  in  Iowa,  $40,752,847. 

It  will  be  obserA^ed  that  the  net  earnings  in  Minnesota  were 
$35,759,203:  in  Iowa,  $16,406,236;  over  twice  as  much  as  in 
Iowa,  with  only  three-quarters  the  mileage. 

'I'he  net  profits  per  mile  in  our  state  were  about  $4,900,  and 
in  Iowa  about  $1,700;  nearly  tliroo  times  as  much  profit  per  mile 
in  our  state. 

If  you  allow  the  same  profit  per  mile  in  Minnesota  as  Iowa 
received,  and  1  can  see  no  good  reason  wliy  it  should  not  be 
approximately  the  same,  you  will  find  that  Minnesota  was  over- 
cliarged  in  a  single  year  on  each  and  every  mile  $3,200,  which 
totals  the  vast  sum  of  $23,238,452.  Consider  this  fabulous 
sum,  uu)re  than  $23,000,000,  the  result  of  oppressive  and  unrea- 
sonable rates  in  a  single  year. 

A  carload  say  of  20,000  pounds  of  first  "class  merchandise 
in  Iowa  can  be  shipped  100  miles  for  $48,  while  for  a  distance 
of  98  miles,  say  from  Minneapolis  to  Melrose,  in  our  state,  the 
rate  per  car  load  of  the  same  class  of  freight  is  $82.  You  will 
notice  a  marked  ditference  as  soon  as  you  cross  our  southern 
line;  rates  are  mucli  higher  in  southern  Minnesota  than  in 
northern  Iowa.  ;ind  tlie  differences  increase  as  vou  come  farther 


21 


north.  For  inshuice,  compare  the  eliargos  of  the  Iowa  and 
Dakota  division  of  the  Chicago,  Milwaukee  &  St.  Paul  Kailway, 
whicli  traverses  east  and  west  the  northern  edge  of  Iowa,  with 
the  charoes  on  their  southern  Minnesota  division.  traviM-sinir 
the  soutliern  edge  ot  Minnesota  cast  ami  west  and  running 
parallel  with  their  low-a  and  Dakota  division,  taking  points  in 
the  comparison  that  will  be  directly  opposite  each  other,  only 
across  tlie  state  line : 

From  Mason  City.  la.,  west  on  Charges  on  car  load 

the  I.  &  D.  Div.  of  C,  M.  1st  class   mdse. 

&  St.  P.  R'y  to-  of  20,000  lbs. 

Miles  1st  Class       4th  Class 

Algona,  Iowa 50  20  10  $'10.00 

Spencer,  Iowa   100  24  12  48.00 

Hull,  Iowa 150  32  15.3  64.00 

From  Albert  Lea,  Minn,,  west  Charges  on  car  load 

on  S.  M.  Div.  of  the  C,  M.  of  20,000  lbs.  1st 

&  St.  P.  R'y  to—  class  indse. 

Miles  1st  Class        4th  Class 

Huntley,  Minn 46  30  15  $60 

Lakefield,  j\Iinn 96  40  20  80 

Edgerton,  Minn 150  50  25  100 

Measured  by  any  standard,  our  people  are  charged  most 
excessive  freight  rates  in  comparison  with  our  low'a  neighbors. 

Do  you  think  our  people  are  satisfied  to  pay  the  fabulous 
price  of  $23,000,000  annually  more  than  their  neighbors  for  like 
service  ?  Do  you  think  any  man  who  says  they  have  no  complaint 
to  make  properly  represents  public  sentiment  in  our  state?  Why 
should  rates  be  higher  in  Minnesota  than  Iowa?  They  should 
not.  When  the  distance  tariff  went  into  effect  in  Iowa  it  was 
asserted  that  there  would  be  no  more  railroad  building  in  that 
state  and  it  was  claimed  by  the  transportation  companies  that 
it  practically  meant  the  confiscation  of  their  property.  The 
Supreme  Court  of  Iowa,  as  well  as  the  Supreme  Court  of  the 
United  States,  held  that  the  rates  established  by  said  distance 
tariff  was  not  a  confiscation  of  railroad  property  and  that  the 
railroads  Avere  still  in  a  position  to  make  as  large  earnings  on 
their  capital  invested  as  they  were  entitled  to  make,  and  that  to 
charge  more  for  their  services  would  be  an  injustice. 

Did  railroad  building  case?  Not  by  any  means.  The  in- 
crease in  mileage  has  been  large  and  has  kept  pace  with  similar 
work  in  other  states.  Was  railroad  property  confiscated?  Not 
at  all.  The  stock  of  two  companies  doing  a  very  large  propor- 
tion of  tlieir  business  in  Iowa  was  quoted  recently  as  selling 
respectively  for  243%  and  1771/2  per  share  of  $100,  and  to 
convince  the  public  that  the  stock  was  not  too  high,  a  report 
from  New  York  says  tliat  one  of  the  companies  shows  by  a  late 
statement  that  it  was  able  to  pay  a  large  dividend  on 
$300,000,000.     It  will  thus  be  seen  that  the  properties  of  rail- 


22 


roads  were  not  confiscated.     On  the  other  hand,  they  have  been 
and  are  reaping  a  rich  harvest. 

This  comparison  is  made  for  the  purpose  of  showing  both 
that  we  have  reason  to  ask  lower  rates,  and  that  the  railroads 
are  getting  far  more  than  a  reasonable  profit  and  can  without 
any  hardship  whatever  reduce  their  carrying  charges.  Again 
exception  is  taken  to  the  statement  that  the  memorial  of  the 
legislature  last  winter  to  Congress  should  not  have  much  weight 
and  did  not  represent  the  sentiments  of  the  people  of  Minnesota. 
That  the  rate  question  was  not  an  issue  in  the  last  campaign, 
etc.,  etc.  If  I  remember  correctly  the  resolution  passed  both 
houses  without  a  dissenting  vote.  The  rate  question  was  very 
much  alive  before  the  legislature  convened.  Who  can  more  ap- 
propriately represent  the  people  of  a  commonwealth  than  its 
senators  and  representatives  ?  Should  this  body,  or  a  few  favored 
shippers,  have  the  greater  influence  in  the  question  of  freight 
rates  with  the  American  Congress? 

We  should  take  courage.  We  have  a  fearless  leader  to  follow. 
In  every  great  crisis  our  country  has  had  a  man  for  the  occasion. 
Washington  for  the  Eevolution.  Lincoln  to  save  the  Union. 
And  now  to  deliver  us  from  industrial  oppression  we  have  no 
ordinary  leader  as  the  champion  of  the  people.  His  services  to 
mankind,  recently,  mark  him  as  one  of  the  world's  foremost 
men.  Wlierever  peace  is  prized,  his  name  is  revered.  In  view 
of  his  successful  efforts  to  end  the  most  destructive  war  of 
modern  times,  who  stands  first  before  the  world?  Is  it  England's 
King?  Germany's  Emperor?  The  Mikado  of  Japan,  or  the 
Czar  of  all  the  Eussias  ?  No !  It  is  our  own  President,  Theo- 
dore Eoosevelt. 

Some  say  that  he  is  not  as  earnest  in  the  cause  as  he  was.  I  do 
not  believe  it.  I  would  as  soon  think  that  the  rock  of  Gibraltar 
could  be  moved  from  its  base  as  to  think  that  Theodore  Eoose- 
velt would  go  back  on  a  proposition  that  he  had  made  to  the  Amer- 
ican people.  He  will  do  his  duty.  Shall  we  do  ours  ?  In  our  coun- 
try the  people  rule.  We  have  a  representative  government,  and 
every  man  is  responsible  to  the  extent  of  one  vote  for  the  manage- 
ment of  that  great  concern.  I  have  no  fear  for  the  result.  I 
could  not  be  a  pessimist  if  I  would  try.  We  heard  a  good  deal 
about  calamity  howlers  a  few  years  ago.  The  calamity  howler 
IS  a  man  now  of  great  wealth  who  does  not  wish  to  obey  the 
law.  and  says  the  law  should  not  be  enforced.  It  is  not  so.  Do 
not  be  deceived.  Do  your  duty  as  American  citizens.  Be  inspired 
by  our  past  history.  Have  we  ever  met  a  difficulty  and  not  over- 
come it?  Is  our  past  history  not  most  inspiring  ?"^  We  have  met 
every  trouble  and  settled  it  properly  to  the  interest  of  the  Ameri- 
can people,  and  if  we  cannot  win  now,  organized  as  we  are,  and 
with  a  peerless  leader,  it  seems  to  me  that  our  chances  ever  to  win 
are  slim.     And  so  I  urge  you,  and  I  bring  you  word  of  good  cheer 


23 

from  the  North  Star  State.  It  is  my  hope,  it  is  my  belief,  that 
every  member  of  Congress  from  that  great  state  will  be  found  in 
favor  of  rate  regulation  and  standing  by  the  people  of  the  United 
States.  One  gentleman  who  goes  down  to  Washington  says 
the  memorial  we  sent  down  there  should  receive  no  weiciht  be- 
cause  it  was  not  an  issue  in  the  campaign.  If  I  remember  it 
was  quite  an  issue.  Meetings  were  held  all  over  that  great 
state,  and  the  people  were  aroused.  Both  the  incoming  and  out- 
going governors  favored  it,  and  it  is  the  second  time  that  Min- 
nesota has  recommended  such  legislation.  Minnesota  is  as  alive 
and  well  as  any  other  state  in  the  Union,  and  nineteen-twentieths 
of  the  people  are  in  favor  of  this,  and  will  fight  till  they  win." 

Mr.  J.  A.  Van  Hoose:  "Mr.  Chairman  and  Gentlemen:  I 
think  that  in  all  this  business  and  enthusiasm  which  is  taking 
hold  of  us  here  we  should  not  forget  sentiment;  we  should  not 
forget  appreciation ;  and  I  feel  quite  sure  that  you  will  join  with 
me,  one  and  all,  in  requesting  that  this  Chairman  who  has  been 
honored  by  you,  will  wire  Mr.  Bacon  our  sympathy  and  our 
appreciation;  and  I  ask  that  you  signify  this  desire  by  a  rising 
vote." 

The  chairman  having  called  for  a  rising  vote,  the  motion 
prevailed. 

The  Chairman:  "Gentlemen,  it  is  carried.  The  chairman 
will  carry  out  the  instruction.  Is  there  any  other  business  which 
you  wish  offered  for  your  consideration  at  this  time?  If  not 
I  would  say  that  it  is  the  wish  of  the  executive  officers  of  this 
Convention  that  those  of  you  who  have  resolutions  which  you 
wish  to  offer  will  be  good  enough  to  reduce  them  to  writing 
and  present  them  at  this  afternoon's  session,  which  will  meet 
in  this  room  at  3  o'clock,  at  which  time  a  permanent  organization 
will  be  effected,  and  a  Committee  on  Eesolutions  appointed  to 
consider  all  resolutions  which  you  may  offer." 

Judge  S.  H.  Cowan:  "Mr.  Chairman,  before  the  audience 
leaves,  I  desire  the  privilege  of  the  floor  just  a  moment  to  make 
an  explanation.  The  Executive  Committee,  as  I  stated  this 
morning,  felt  itself  impelled  to  require  certain  declarations,  in 
order  that  you  might  have  just  such  a  Convention  as  you  are 
having,   perfectly   free   speech    and    to    the    point.      We    want 


24 

everybody  here  who  stands  by  the  principles  of  this  organiza- 
tion, which  are  quite  well  known,  which  are  the  principles  of 
the  President,  to  have  a  part  in  this  meeting,  if  they  are  dele- 
gates to  it.  If  by  inadvertence,  if  by  a  peculiar  circumstance 
which  we  could  not  in  advance  have  imagined  or  provided  for, 
we  have  excluded  any  delegates  who  desired  to  participate  with 
us  to  the  end  of  what  we  are  seeking,  this  committee  desires  to 
have  them  present.  I  desire,  therefore,  to  explain  that  our 
requirements  here  this  morning  for  admittance  were  for  the  pur- 
pose of  your  temporary  organization,  which  has  been  or  will  be 
perfected  by  the  report  of  the  Committee  on  Credentials,  as 
made  at  3  o'clock  this  afternoon,  which  undoubtedly  will  be 
adopted.  Any  gentleman  who  subscribes  to  the  principles  which 
this  Executive  Committee  has  required  in  order  to  gain  access 
to  this  hall,  is  requested  to  present  his  credentials  to  the  Creden- 
tials Committee  in  order  that  we  may  not  do  wrong,  while  we 
feel  that  we  must  take  a  strong  position  in  order  to  do  right." 
On  motion,  the  Convention  adjourned  until  3  o'clock  p.  m. 


SECOND  SESSION. 

Chicago,  111.,  Oct  26,  1905. 

The  second  session  of  the  Convention  was  called  to  order 
by  the  Temporary  Chairman  at  3  o'clock  p.  m. 

The  Chairman  :  "The  first  thing  in  order  will  be  the  report 
of  the  Committee  on  Credentials.  I  call  for  Mr.  Howard,  chair- 
man of  that  committee." 

It  having  come  to  the  knowledge  of  the  Executive  Committee, 
some  time  prior  to  the  assembling  of  the  Convention,  that  rail- 
way officials  in  various  parts  of  the  country  were  engaged  in  a 
systematic  effort  to  secure  the  appointment  of  delegates  of  their 
own  selection,  in  sufficient  numbers  to  thwart  the  purpose  of  the 
Convention  as  stated  in  the  call,  the  Executive  Committee  de- 
cided to  admit  only  such  delegates  to  the  hall  of  the  Convention 
as  were  in  harmony  with  that  purpose,  and  to  require  as  a  con- 


25 

dition  precedent  the  signing  of  tlie  declaration  of  principles 
contained  in  the  report  of  the  Committee  on  Credentials,  which 
were  substantially  embodied  in  the  call. 

Mr.  Howard:  Mr.  Chairman  and  Gentlemen:  Your  Com- 
mittee on  Credentials  begs  leave  to  report  as  follows : 

1.  All  those  delegates  subscribing  to  the  principles  of  the 
call,  as  enunciated  b}^  President  Roosevelt  in  his  last  message  to 
Congress,  are  entitled  to  seats  in  this  Convention ;  we  recommend 
also  that  Mr.  S.  C.  Mead,  representing  the  Merchants'  Associa- 
tion of  i^ew  York,  be  admitted  on  the  basis  of  his  letter  presented 
to  this  committee. 

2.  Delegates  representing  more  than  one  organization  shall 
be  allowed  to  vote  for  each  organization  for  which  they  present 
properly  certified  credentials. 

3.  The  following  persons  have  presented  credentials  as  dele- 
gates representing  the  several  organizations  and  congressional 
districts  named,  and  have  subscribed  to  the  following  declaration 
of  principles : 

"We,  the  undersigned  delegates,  for  ourselves  and  for  the  Asso- 
ciation or  organization  which  we  represent,  endorse  the  principles  of 
the  foregoing  call  for  the  Interstate  Commerce  Law  Convention,  and 
endorse  and  agree  to  support  the  legislation  as  outlined  in  the  Presi- 
dent's last  annual  message  to  Congress,  to  so  amend  the  Interstate 
Commerce  law  that  the  Interstate  Commerce  Commission  shall  he 
given  the  power,  where  a  given  rate  has  been  challenged,  and  after 
fxill  hearing  found  to  have  been  unlawful,  to  prescribe  what  shall  be 
a  lawful  and  proper  rate  to  take  its  place;  the  ruling  of  the  Com- 
mission to  take  effect  immediately. ' ' 

NATIONAL  AND  SECTIONAL  ORGANIZATIONS. 

American  Merchants'  and  Manufacturers'  Association- 
Hugh  A.  Holmes,  Ottawa,  Kan. 
American  Stock  Growers'  Association — 

Wm.  H.  Chadwick,  Chicago,  111. 

I.  M.  Humphrey,  Rapid  City,  S.  D. 

Murdo  Mackenzie,  Trinidad,  Col. 

Wm.  E.  Hughes,  Denver,  Col. 

S.  H.  Cowan,  Ft.  Worth,  Tex. 
Cattle  Growers'  Association  of  America — 

Murdo  Mackenzie,  Trinidad,  Col. 
Central  Yellow  Pine  Association — 

Silas  W.  Gardiner,  Laurel,  Miss. 
Georgia  Interstate  Saw  Mill  Association — 

F.  E.  Waymer,  Jacksonville,  Fla. 
Grain  Dealers'  National  Association — 

John  F.  Courcier,  Toledo,  O. 

John  B.  Daish,  Washington,  D.  C. 

H.  E.  Halliday,  Cairo,  111. 
Herford  Cattle  Breeders'  Association — 

C.  R.  Thomas,  Kansas  City,  Mo. 


26 


Illiuois  and  Wisconsin  Retail  Coal  Dealers'  Association- 

R.  J.  Wilbur,  Waukesha,  Wis. 

Michigan  and  Indiana  Retail  Coal  Dealers'  Association- 

J.  W.  Rj'ker,  Kalamazoo,  Mich. 
A.  J.  Kraft,  Battle  Creek,  Mich. 

Millers'  National  Association  of  the  United  States— 

F.   H.  Magdeburg,  Milwaukee,  Wis. 
Millinery  Jobbers'  Association — 

Frederick  Bode,  Chicago,  111. 
National  Association  of  Manufacturers  of  America — 

Edwin  B.  Pike,  Pike,  N.  H. 

C.  A.  Carlisle,  South  Bend,  Ind. 

J.  W.  Wells,  Menominee,  Mich. 

National  Coopers'  Association—: 

Allen  S.  Ray,  Chicago,  111. 
National  Dining  Table  Association — 

M.  Wulpi,  Omaha,  Neb. 
National  Hay  Association — 

Frank  McElwain,  Chicago,  111. 

F.  D.  Voris,  Neoga,  111. 

H.  E.  Halliday,  Cairo,  111. 

John  B.  Daish,  Washington,  D.  C. 

R.  C.  Menefee,  Kansas  City,  Mo. 

John  F.  Courcier,  Toledo,  O. 

P.  E.  Goodrich,  Winchester,  Ind. 

George  S.  Bridge,  Chicago,  111. 

National  League  of  Commission  Merchants — 
Frank  E.  Nogren,  Chicago,  111. 
John  C.  Scales,  Chicago,  111. 
C.  B.  Ayers,  Chicago,  111. 
F.  E.  Wagner,  Chicago,  111. 

National  Live  Stock  Association — 

W.  A.  Harris,  Chicago,  111. 
-  Frank  Cooper,  Chicago,  111. 

Edward  H.  Reed,  Wyncote,  Wyo. 
National  Paint,  Oil  and  Varnish  Association — 

Charles  E.  Field,  Chicago,  111. 

A.  G.  Cox,  Chicago,  111. 

Geo.  E.  Watson,  Chicago,  III. 

National  Wholesale  Druggists'  Association — 
L.  A.  Lange,  Milwaukee,  Wis. 
W.  J.  Mooney,  Indianapolis,  Ind. 
W.  C.  Schurtleff,  Chicago,  111. 

National  Wholesale  Lumber  Dealers'  Association — 

R.  W.  Higbie,  New  York,  N.  Y. 

E.  F.  Perry,  New  York,  N.  Y. 

F.  R.  Babcock,  Pittsburg,  Pa. 

New  England  Export  Association — 

W.  Lee  Pinney,  Boston,  Mass. 
Proprietary  Association  of  America — 

Geo.  L.  Douglass,  Chicago,  111. 
Southern  Hardware  Jobbers'  Association — 

W.  E.  Newill,  Atlanta,  Ga. 


27 


Southern  Hardwood  Lumber  Association — 

W.  E.  Newill,  Atlanta,  Ga. 
Southern  Manufacturers'  Association — 

E.  F.  Verdery,  Augusta,  Ga. 
Southern  Wholesale  Grocers'  Association — 

J.  A.  Van  Hoose,  Birmingham,  Ala. 

Southwestern  Lumbermen's  Association — 

E.  R.  Burkholder,  McPherson,  Kan. 

J.  E.  Evans,  Emporia,  Kan. 

Harry  A.  Gorsuch,  Kansas  City,  Mo. 

E.  C.  Robinson,  St.  Louis,  Mo. 

Travelers'  Protective  Association  of  America — 
Thad  T.  Howe,  Chicago,  111. 

F.  W.  Crandall,  St.  Louis,  Mo. 
M.  Wulpi,  Omaha,  Neb. 

John  Kapmire,  Milwaukee,  Wis. 

A.  E.  McKenzie,  Denver,  Col. 

E.  A.  Hartman,  New  Albany,  Ind. 

Edw.  Altshelen,  Louisville,  Ky. 

James  T.  Short,  Louisville,  Ky. 

Scott  W.  Moore,  Louisville,  Ky. 

Earl  Palmer,  Paducah,  Ky. 

V.  J.  Schoenecker,  Milwaukee,  Wis. 

John  J.  Shuttleworth,  Terre  Haute,  Ind. 

Western  Fruit  Jobbers'  Association — 
C.  F.  Francis,  Davenport,  la. 

E.  B.  Branch,  Omaha,  Neb. 

Wholesale  Saddlery  Association  of  the  United  States — 
Henry  Othmer,  Chicago,  111. 
Chas.  Kiper,  Chicago,  111. 

Winter  Wheat  Millers'  League — 
M.  H.  Davis,  Shelby,  O. 

STATE  AND  LOCAL  ORGANIZATIONS. 

CALIFORNIA. 

Alhambra  Orange  Growers'  Association — 
Lindsay  Producers'  Association — 

J.  P.  Scanlon,  Lindsay. 
Highgrove  Fruit  Exchange — 

F.  M.  Ryon,  Highgrove. 

Imperial  Valley  Fruit  and  Produce  Association — 
T.  P.  Banta,  Imperial. 

Indian  Hill  Citrus  Union — 
North  Pomona  Club — 

Geo.  M.  Fox,  North   Pomona. 

Inwindale  Citrus  Union — 
Semi-Tropic  Fruit  Exchange^ 

Geo.  A.  Pharters,  Irwindale. 

Lindsay  Fruit  Association — 
Lindsay  Producers'  Association — 

H.  Purney,  Lindsay. 
Porterville  Citrus  Association — 

G.  W.  Felts,  Santa  Barbara. 


28 


Riverside  Fniit  Exchange — 

Walter  R.  Farley,  Riverside. 

San  Diego  Chamber  of  Commerce — 

E.  T.  Mudge,  San  Diego. 

Chamber  of  Commerce  of  Santa  Barbara  County- 
Wallace  M.  Bell,  Milwaukee. 

Santiago  Orange  Growers'  Association — 

S.  S.  Finlej',  Chicago,  111. 

Ventura  Board  of  Trade — 
C.  C.  Trague,  Ventura. 

Cahuenga  Orange  Growers'  Association — 
Filmore  Citrus  Fruit  Association — 
Queen  Colony  Fruit  Exchange — 
Pasadena  Orange  Growers'  Association — 
Placenta  Orange  Growers'  Association — 
Riverside  Heights  Orange  Association — 
Whittier  Citrus  Association — 
C.  W.  Leflangwell,  Jr.,  Association — 

F.  Q.  Story,  Los  Angeles. 

East  Highlands  Fruit  Association — 
Redlands  Board  of  Trade — 
Redlands  Eclipse  Orange  Association — 
Redlands  Fruit  Association — 
Redlands  Heights  Fruit  Exchange — 
Redlands  Orange  Growers'  Association — 
Redlands  Orange  Producers'  Association — 

J.  S.  Edwards,  Redlands. 

E.  U.  Lyon,  Redlands. 

Covina  Fruit  Exchange — 
Covina  Highland  Citrus  Association — 
Covina  Orange  Growers'  Association — 
Covina  Upland  Citrus  Association — 
Duarte-Monrovia  Fruit  Exchange — 
Victoria  Avenue  Citrus  Association — 
W.  H.  Jameson  Association — 
L.  P.  Jennison,  Covina. 

Azusa-Covina-Glendora  Fruit  Exchange — 
Azusa  Citrus  Association — 
Charter  Oak  Citrus  Association — 
Glendora  Citrus  Association — 
P.  C.  Daniels,  Azusa. 

Indian  Hill  Citrus  Union — 
Pomona  Board  of  Trade — 

Edmund  C.  Robinson,  Pomona. 

California  Fruit  Growers'  Exchange — 
Corona  Board  of  Trade — 
Los  Angeles  Chamber  of  Commerce — 
Redlands  Board  of  Trade — 
Redlands  Golden  Orange  Association — 
Jos.  H.  Call,  Los  Angeles. 

Citrus  Association  of  Ontario. 
Cucamanga  Citrus  Association — 
Exeter  Citrus  Association — 
Fernando  Fruit  Growers — 


29 


Lemon  Growers'  Exchange — 

Mountain  View  Association — 

Ontario  Cucamanga  District  Exchange — 

Stewart  Citrus  Association — 

Upland  Citrus  Association — 

West  Ontario  Association — 

James  L.  Paul,  Chicago,  111. 

Bryn  Mawr  Orange  Growers'  Association, 
Highland  Orange  Growers'  Association — 
San  Bernardino  County  Fruit  Exchange — 
San  Bernardino  Board  of  Trade — 

J.   E.   Scott,   San  Bernardino. 

Colton  Fruit  Exchange — 
Colton  Chamber  of  Commerce — 
Merchants'  Association  of  San  Bernardino — 
Rialto  O.  L.  Association — 

Earl  F.  Van  Luven,  Colton. 

Claremont  Citrus  Union — 
Pomona  Board  of  Trade — 
Pomona  Fruit  Growers'  Exchange — 
Pomona  Business  Men's  Association — 
San  Antonio  Fruit  Exchange — 
San  Dimes  Citrus  Union — 
San  Dimes  Lemon  Association — 
P.  J.  Dreher,  Pomona. 

COLORADO. 

Colorado  Cattle  and  Horse  Raisers'  Association— 

Dr.  Chas.  G.  Lamb,  Denver. 
Denver  Chamber  of  Commerce — 

J.  S.  Temple,  Denver. 

Edward  Keating,  Denver. 

Chas.  E.  Stubbs,  Denver. 
Denver  Real  Estate  Exchange — 

W.   W.   McLellan,  Denver. 

R.   A.   Morrison,   Denver. 
Denver  Retail  Grocers'  Association — 

R.  J.  Morris,  Denver. 
Trinidad  Chamber  of  Commerce — 

Murdo   Mackenzie,   Trinidad. 

DISTRICT  OF  COLUMBIA. 

Washington  Coal  Exchange — 

James  S.  Raeburn,  Washington,  D.  C. 

GEORGIA. 

Atlanta  Freight  Bureau — 

W.   E.   Newill,  Atlanta, 

ILLINOIS. 

Fox  River  Valley  Manufacturers'  Association — 

D.  W.  Simpson,  Aurora. 
Illinois  Farmers'  and  Grain  Dealers'  Association- 
Charles  Adkins,  Bement. 
L.  H.   Perry,  Ransom. 


30 

Illinois  Lumber  Dealers'  Association — 
Geo.  W.  Hotchkiss,  Chicago. 
H.  H.  Gibson,  Chicago. 
W.  T.  Boston,  Yorkville. 
E.   L.   Roberts,   Yorkville. 
W.  H.  Hunter,  La  Salle.  - 

Illinois  Manufacturers'  Association — 

B.  A.  Eckhart,  Chicago. 

La  Verne  W.  Noyes,  Chicago. 

C.  H.    Smith,   Aurora. 
John  E.  Wilder,  Chicago. 
Wm.  Butterworth,  Moline. 

Illinois  State  Grange — 

Robert  Eaton,  Elwood. 

Anna  Fruit  Growers'  Association — 
E.  G.  Davies,  Chicago. 

Cairo  Board  of  Trade — 

H.  E.  Halliday,  Cairo. 

CMcago  Board  of  Trade — 

J.  T.  Sickel,  Chicago. 
Richard  Gambril,  Chicago. 

B.  A.  Eckhart,  Chicago. 
E.  L.   Glaser,   Chicago. 
Wm.   N.   Eckhardt,   Chicago. 
W.  B.  Bogert,  Chicago. 

L  P.  Rumsey,  Chicago. 

E.  W.  Wagner,  Chicago. 
R.   S.  Lyon,  Chicago. 

Chicago  Live  Stock  Association — 

C.  W.  Baker,  Chicago. 
M.  P.  Buel,  Chicago. 
J.  W.  Moore,  Chicago. 
Geo.  V.  Wells,  Chicago. 

Chicago  Lumber  Dealers'  Association — 

C.  F.  Wiehe,  Chicago. 
B.  W.  Studden,  Chicago. 

Chicago  Shippers'  Association — 
A.  A.  Sprague,  Chicago. 
W.  C.  Stacey,  Chicago. 

Merchants'  Association  of  Chicago — 

Edward  H.  Taylor,  Chicago. 
Swan  Nelson,  Chicago. 

Decatur  Chamber  of  Commerce — 
Geo.  W.  Mueller,  Decatur. 
Adolph  Mueller,  Decatur. 

Quincy  Chamber  of  Commerce — 

F.  W.  Osborn,  Quincy. 

Rockford  Manufacturers'  and  Shippers'  Association- 
Robert  C.  Lind,  Rockford. 

Springfield  Business  Men's  Association — 

Henry  A.  Dirksen,  Springfield. 


31 


INDIANA. 

Indiana  Grain  Dealers'  Association — 
C.  S.  Bash,  Ft.  Wayne. 

Indiana  Hardwood  Lumbermen's  Association— 

J.  M.  Pritchard,  Indianapolis. 
•  J.  V.  Stinson,  Huntingburg. 

Shippers'  Protective  League  of  Indiana — 

James  T.  Eaglesfield,  Indianapolis. 

Evansville  Manufacturers'  Association — 

A.   C.   Rosencranz,  Evansville. 

Ft.  Wayne  Commercial  Club — 
T.  T.  Thieme,  Ft.  Wayne. 

Indianapolis  Board  of  Trade — 

F.  M.  Murphy,  Indianapolis. 

Indianapolis  Commercial  Club — 
C.  A.  Kenyon,  Indianapolis. 

E.  C.  Atkins,  Indianapolis. 
Geo.  G.  Griffin,  Indianapolis. 
W.  J.  Mooney,  Indianapolis. 
John  W.   Kern,  Indianapolis. 
W.  L.  Sanford,  Indianapolis. 

Kokomo  Commercial  Club — 

J.  E.  Frederick,  Kokomo. 

Marion  Commercial  Club — 

Leo  Nusbaum,  Marion. 

IOWA. 

Iowa  Farmers  and  Grain  Dealers'  Association- 

C.  G.  Messerole,  Mason  City. 

Algona  Commercial  Club — 

Joe  Misbach,  Algona. 

Buckingham  Commercial  Club — 
A.  L.  Ames,  Buckingham. 

Cedar  Kapids  Commercial  Club — 

Rolland  Shaver,  Cedar  Rapids. 

Council  Bluffs  Commercial  Club — 

F.  H.  Keys,  Council  Bluffs. 

Dubuque  Shippers'  Association — 

W.   B.   Martin,  Dubuque. 

East  Des  Moines  Commercial  Club — 

E.  F.  Whitney,  Des  Moines. 

Mason  City  Commercial  Club — 

Geo.   P.   Smith,  Mason  City. 
Marshalltown  Commercial  Club — 

Merritt  Green,  Marshalltown. 

KENTUCKY. 

Hartford  Commercial  Club — 

Cal.  P.  Keon,  Hartford. 


32 


KANSAS. 

Kansas  Federation  of  Commercial  Interests — 
Charles  H.  Ridgway,  Kansas  City. 
J.   S.  George,  Hutchinson. 
H.  L.  Resing,  Wichita. 
J.  O.  Davidson,  Wichita. 
D.  W.  Cowden,  SaHna. 
J.  A.  Ranney,  Arkansas  City. 

Concordia  Commercial  Club — • 
O.  E.  Wright,  Concordia. 

Hutchinson  Commercial  Club — 

Emerson  Carey,  Hutchinson. 

Independence  Commercial  Club — 

T.  H.  Stanford,  Independence. 

Kansas  City  (Kan.)  Mercantile  Club — 

Benj.  Sclmierle,  Kansas  City. 
John  A.   Eaton,  Kansas  City. 

Kaw  Valley  Commercial  Club — 

C.  S.  Griffin,  Kansas  City. 
H.  E.  Dean,  Kansas  City. 

Lindsborg  Commercial  Club — 

J.  O.  Sundstrom,  Lindsborg. 

Salina  Commercial  Club — 

D.  W.  Cowden,  Salina. 

Wichita  Chamber  of  Commerce — 

J.  E.  Howard,  Wichita. 
C.  L.  Davidson,  Wichita. 

Wichita  Commercial  Club — 

Frank  C.  Wood,  Wichita, 
C.  L.  Davidson,  Wichita. 

MARYLAND. 
Baltimore  Lumber  Exchange — 

Edward  P.  Gill,  Baltimore. 
Lewis  Diel,  Baltimore. 

MASSACHUSETTS. 

Massachusetts  Wholesale  Lumber  Association- 

W.  C.  B.  Robbins,  Boston. 

MICHIGAN. 

Michigan  Hay  Association — 

Geo.  C.  Warren,  Saginaw. 
Louis  C.   Slade,  Saginaw. 

Michigan  State  Millers'  Association — 

C.  B.  Chatfield,  Bay  City. 

Retail  Commercial  Exchange — 

Samuel  Howes,  Battle  Creek. 

Bay  City  Board  of  Trade — 

F.  E.  Parker,  Bay  City. 


33 

Grand  Rapids  Board  of  Trade — 

S.  Wessellins,  Grand  Rapids. 

Geo.  A.  Whiteworth,  Grand  Rapids. 

E.  D.  Conger,  Grand  Rapids. 

Geo.  A.  Davis,  Grand  Rapids. 

E.  K.  Pritchett,  Grand  Rapids. 

H.  D.  C.  Van  Asmus,  Grand  Rapids. 

Saginaw  Board  of  Trade — 

E.  P.  Waldron,  Saginaw. 

F.  E.  Parker,  Saginaw. 

MINNESOTA. 
Minnesota  Municipal  and  Commercial  League — 

J.   Esbjornsson,  Litchfield. 
W.  C.  Webber,  Rochester. 

Minnesota  Retail  Grocers  and  General  Merchants'  Association- 

E.  M.  Ferguson,  Duluth. 

Minnesota  Shippers'  and  Receivers'  Association — 

Grant  Van  Sant,  Minneapolis. 
C.  F.  Hubbard,  Minneapolis. 

Duluth  Commercial  Club — 
T.  W.  Hugo,  Duluth. 
E.  M.  Ferguson,  Duluth. 

Olmstead  County  Union  A.  S.  F.  E. — 

W.  G.  Scott,  Rochester. 

St.  Paul  Produce  Exchange — 
St.  Paul  Board  of  Trade — 

W.  H.  Patton,  St.  Paul. 

St.  Paul  Retail  Fuel  Dealers'  Association — 

J.  M.  Mason,  St.  Paul. 

MISSISSIPPI. 
Mississippi  Cotton  Exchange — 

C.  W.  Robinson,  Meridian. 
Laurel  Board  of  Trade — 
J.  L.  Ottman,  Laurel. 
S.  W.  Gardiner,  Laurel. 

Meridian  Board  of  Trade — 

C.  W.  Robinson,  Meridian. 

T.  C.  Carter,  Meridian. 
The  Boosters'  Club  of  Meridian — 

C.  W.  Robinson,  Meridian. 
T.  C.  Carter,  Meridian. 

MISSOURI 
St.  Louis  Manufacturers'  Association — 

Anthony  Ittner,  St.  Louis. 
St.  Louis  Merchants'  Exchange — 
W.  P.  Kenett,  St.  Louis. 
W.  H.  Danforth,  St.  Louis. 
Geo.  F.  Powell,  St.  Louis. 
T.  R.  Ballard,  St.  Louis. 


34 


NEBRASKA. 

Nebraska  Lumber  Dealers'  Association — 

B.  Critchfield,  Lincoln. 
Wm.  Krotter,  Stuart. 

Nebraska  Stock  Growers'  Association — 
W.  G.  Comstock,  Ellsworth. 

Nebraska  Wholesale  Lumber  Dealers'   Association — 

Wm.   Krotter.   Stuart. 

Arlington  Heights  Fruit  Exchange — 
W.  A.  Hunter,  Omaha. 

Commercial  Club  of  Beatrice — 

G.  H.  Johnson,  Beatrice. 

South  Omaha  Live  Stock  Exchange — 

J.  M.  Guild,  South  Omaha. 
J.  M.  Laverty,  South  Omaha. 

NEW  YORK. 

New  York  Lumber  Trade  Association — 
J.  D.  Crary,  New  York  City. 
R.  W.   Higbie,  New  York  City. 

New  York  Manufacturers'  Association — 
James  T.  Hoile,  Brooklyn. 
Francis  H.  Stillman.  Brooklyn. 

East  Buffalo  Live  Stock  Association — 

C.  F.  Watkins,  East  Buffalo. 
Utica  Chamber  of  Commerce — 

John  D.  Kernan,  Utica. 
O.  S.  Foster,  Utica. 

OHIO. 

Middle  Ohio  Grain  Dealers'  Association — 

l'>ank   11.    Fanner.  Alansheld. 
Ohio  Grain  Dealers'  Association — 
T.  B.  Marshall,  Sidney. 
J.  W.  INLcCord.  Columbus. 

Ohio  Millers'  Association — 
C.  B.  Jenkins,  Marion. 
Ohio  Shippers'  Association — 

J.  W.   McCord,  Columbus. 
E.   E.   Williamson,   Cincinnati. 

Ohio  State  Grange  P.  of  H. — 

W.    1.   Chamberlain,   Hudson. 
Southern  Ohio  Export  Association — 
O.  J.  Mendall,  Cincinnati. 
C.  B.   Bartlett,  Cincinnati. 

Union  Association  Lumber  Dealers — 

H.  S.  Adams,  Chillicothe. 
James   Anderson,    Sidney. 

Cincinnati  Business  Men's  Club — 

b'rank   11.   Shaffer.  Cincinnati. 

Cincinnati  Branch,  National  Metal  Trades'  Association- 
Murray  Shipley.  Cincinnati, 


35 


Cincinnati  Carriage  Makers'  Club — 

James  J.  Hooker,  Cincinnati. 
R.  H.  West,  Cincinnati. 

Cincinnati  Chamber  of  Commerce — 

E.   E.   Williamson,   Cincinnati. 
Cincinnati  Receivers'  and  Shippers'  Association — 
E.   E.   Williamson,   Cincinnati. 
James  J.  Hooker,  Cincinnati. 
R.  H.  West,  Cincinnati. 
R.  P.  Gillham, 

Manufacturers'   Club  of  Cincinnati — 

E.  E.  Williamson,  Cincinnati. 
James  J.  Hooker,  Cincinnati. 
R.  H.  West,  Cincinnati. 

The  Queen  City  Furniture  Club — 

John  Donnette,  Jr.,  Cincinnati. 
Cleveland  Chamber  of  Commerce — 
W.   H.   Sigler,   Cleveland. 
Lucien  B.   Hall,  Cleveland. 

Lima  Business  Men's  Association — 

Frank  T.   Campbell,  Lima. 
Steubenville  Retail  Merchants'  Board  of  Trade — 

C.  L.  Williams,  Stubenville. 
Sunset  Fruit  Co. — 

A.  J,  Plunkard,  Canton. 

OKLAHOMA. 

Oklahoma  City  Chamber  of  Commerce — 
Oklahoma  Traflc  Association — 

J.   H.  Johnston,  Oklahoma  City. 

PENNSYLVANIA. 

Flint  and  Lime  Glass  Manufacturers'  Association- 
Daniel  C.   Ripley,   Pittsburg. 

Pittsburg   Board   of   Trade — 

A.  P.  Biirchfield,  Pittsburg. 

Pittsburg  Wholesale  Lumber  Dealers'  Association- 

A.   M.  Turner,   Pittsburg. 

Scranton  Board  of  Trade — 

Jas.  A.  Lansing,  Scranton. 

SOUTH  DAKOTA. 

South  Dakota  Live  Stock  Association — 

Murdo  Mackenzie,  Trinidad,  Colo. 
Lead  Commercial  Club — 

P.  A.  Gushurst.  Lead. 

TEXAS. 

Cattle  Raisers'  Association  of  Texas — 
S.  B.  Burnett,  Ft.  Worth. 
Wm.  E.  Hughes,  Denver,  Colo. 
Murdo  Mackenzie,  Trinidad,  Colo. 
S.  H.  Cowan,  Ft.  Worth. 
M.  P.  Buel,  Ft.  Worth. 


36 


Texas  Grain  Dealers'  Association — 

James  Z.  Keel,  Gainesville. 
Orain  Dealers'  Association  of  Northern  Texas — 

S.  B.  Burnett,  Ft.  Worth. 

Dallas  Commercial  Club — 
Dallas  Freight  Bureau — 

J.  Farley,  Dallas. 
James  Maroney. 

Houston  Business  League — 

J.  S.  Dougherty,  Houston. 

WASHINGTON. 
Manufacturers'  Association  of  Seattle — 
J.  W.  Kahle,  Seattle. 

WISCONSIN. 

Wisconsin  Hardwood  Lumber  Association — 

H.  C.  Humphrey,  Milwaukee. 
Wisconsin  Live  Stock  Breeders'  Association — 

Geo.  C.  Hill,  Rosendale. 
Wisconsin  Retail  Lumber  Dealers'  Association — 

Ernest  Newell,  De  Forest. 

Paul  Lachmund,  Sauk  City. 

Milwaukee  Chamber  of  Commerce — 

George  A.  Schroeder,  Milwaukee. 
F.  H.  Magdeburg,  Milwaukee. 
D.  G.  Owen,  Milwaukee. 

Merchants'  and  Manufacturers'  Association  of  Milwaukee- 

L.  C.  Whitney,  Milwaukee. 


The  names  of  the  following  delegates  were  registered  without 
stating  the  organizations  represented  by  them : 

I.  Naylor,  Pomona,  Gal. 

Elliott  Durand,  Chicago,  111. 

H.  H.  Gibson,  Chicago,  111. 

C.  F.  Murfey,  Chicago,  111. 

G.  E.  Ludlow,  Moline,  111. 

W.  A.  Rosenfield,  Moline,  111. 

Rufus  T.  Robinson,  Oquawka,  111. 

Job  Freeman,  Linton,  Ind. 

W.  H.  Wheeler,  Dysart,  la. 

David  Rankin,  Epworth,  la. 

Hal.  D.  Bogart,  Mt.  Vernon,  la. 

E.  H.  Emery,  Ottumwa,  la. 

W.  J.  Dixon,  Sac  City,  la. 

W.   B.   Palmer,  Sioux  City,  la. 

Ackley  Hubbard,  Spencer,  la. 

H.  A.  Miller,  Spirit  Lake,  la. 

R.  H.  Downman,  New  Orleans,  La. 

H.  W.  Butler,  Medina,  N.  Y. 

E.  P.  Arpin, 

E.  S.  Conway. 

A.  F.  Foster, 


37 

The  following  organizations  forwarded  proxies  to  the  Secre- 
tary of  the  Convention  authorizing  him  to  cast  the  vote  of  their 
respective  organizations  in  favor  of, the  legislation  recommended 
in  President  Eoosevelt's  last  annual  message  to  Congress  in 
respect  to  governmental  regulation  of  railway  rates : 

ARKANSAS. 

Gentry  Fruit  Growers'  Association — 

O.  W.   Patterson,  Secretary,  Gentry. 

INDIANA. 

La  Fayette  Retail  Merchants'  Association — 
H.  E.  Click,  President,  La  Fayette. 

ILLINOIS. 

Illinois  Live  Stock  Breeders'  Association — 

Fred  H.  Rankin,  Secretary,  Urbana. 
Illinois  Division,  Travelers'  Protective  Association — 

W.  H.  Seed,  President,  Danville,  111. 

IOWA. 

Corn  Belt  Meat  Producers'  Association — 
J.  J.  Ryan,  Secretary,  Ft.  Dodge. 

KANSAS. 
Howard  Commercial  Club — 

Cash  Bartlett,  Secretary,  Howard. 

MASSACHUSETTS. 

Boston  Fruit  and  Produce  Exchange — 

B.  F.  Southwick,  Secretary,  Boston. 

Haverhill  Board  of  Trade — 

Albert  M.  Child,  Secretary,  Haverhill. 

MICHIGAN. 

Michigan  Farm  Products  and  Shippers'  Association — 

M.  G.  Ewer,  Secretary,  Detroit. 
Michigan  Merino  Sheep  Breeders'  Association — 

E.  M.  Bale,  Secretary,  Hamburg. 
Michigan  State  Grange  P.  of  H. — 

Geo.  B.  Horton,  Master,  Fruit  Ridge. 

MINNESOTA. 

Minnesota  Retail  Hardware  Association — 

M.  S.  Mathews,  Secretary,  Minneapolis. 
Rochester  Union  American  Society  of  Equity — 

T.  C.  Phelps,  Secretary,  Rochester. 

MISSOURI. 

Missouri  Retail  Hardware  Dealers'  Association — 

F.  Neudorf,  Secretary,  St.  Joseph. 
Logan  Fruit  Growers'  Association — 

G.  W.  Logan,  Secretary,  Logan. 
Pierce  City  Fruit  Growers'  Association — 

R.  F.  George,  Secretary,  Pierce  City. 


38 

Southwestern  Mercantile  Association — 

Otto  F.  Karbe,  Secretary,  St.  Louis,  Mo. 

St.  Louis  Builders'  Exchange — 

Henry  P'airbank,  President,  St.  Louis. 

St.  Louis  Cotton  Exchange — 

L.  N.  Van  Hook,  Secretary,  St.  Louis. 

NEW  YORK. 

New  York  State  Fruit  Growers'  Association — 

W.  L.   McKay,  Geneva. 
Rochester  Chamber  of  Commerce — 

Clinton   Rogers,   President,   Rochester. 

OHIO. 

Northwestern  Ohio  Swine  Breeders'  Association — 

A.  N.  Wisely,  Secretary,  Ottawa. 
Patrons  of  Industry  of  Ohio — 

Wm.  W.   Kirkpatrick,  Loudonville. 
Commercial  Cluh  of  Dasrton — 

J.  B.  Siders,  Secretary. 
Steubenville  Retail  Grocers'  Association — 

W.  R.  Brown,  Secretary,  Steubenville. 
The  Toledo  Lumbermen's  Club — 

B.  H.  Whitney,  Secretary,  Toledo. 

RHODE  ISLAND. 

Pawtucket  Merchants'  Association — 

T.  P.  Corcoran,  Secretary,  Pawtucket. 

VERMONT. 

Vermont  Dairymen's  Association — 

F.  L.  Davis,  Secretary,  North  Pomphret. 

VIRGINIA. 

Commercial  Association  of  Danville — 

J.  A.  Reagan,  President,  Danville. 

WISCONSIN. 

Superior  Retail  Grocers'  Protective  Association- 
Wisconsin  Retail  Grocers'  and  General  Merchants'  Association — 
A.  T.  Rock,  Secretary,  Superior. 

The  following  delegates  were  appointed  by  the  G-overnors  of 
the  States  named  to  represent  the  congressional  districts  of  their 
respective  States : 

COLORADO. 

Geo.  J.  Kindel,  Denver. 
Wm.  E.  Hughes,  Denver. 

FLORIDA. 

J.  M.  Barrs,  Jacksonville. 

IDAHO. 

R.  F.  Buller,  Hailey. 


39 

ILLINOIS. 

J.  F.  Pierce,  Chicago. 

A.  G.  Jones,  Chicago. 

Francis  W.  Parker,  Chicago. 

Ralph  Metcalf, 

INDIANA. 

Byron  Parsons,  Evansville. 
Cloyd  Laughr}',  Monti  cello. 
Lyman   E.   Ott,   Franklin. 
C.   S.  Bash,  Ft.  Wayne. 
C.  B.  Riley,  Indianapolis. 
J.  E.  Fredrick,  Kokomo. 
J.  V.  Stinson.  Huntingburg. 

IOWA. 
T.  J.  Bray,  Grinnell. 
L.  W.  Lewis,  Clarinda. 
L.  C.   Norris,  Marshalltown. 
S.   W.   Brookhart,  Washington. 
J.  Hughes,  Williamsburg 

KANSAS. 
Charles  N.  Peck,  Concordia. 
George  J.   Barker,  Lawrence. 
S.  S.  Benedict,  Benedict. 
W.  Y.  Morgan,  Hutchinson. 

MINNESOTA. 

A.  F.  Foster,  Littleheld. 

Frank  D.  Larrabee,  Minneapolis. 

H.  J.  Miller,  Luverne. 

S.  R.  Van  Sant,  St.  Paul. 

MICHIGAN. 

Jesse  F.  Orton,  Grand  Rapids. 

S.  O.  Bush,  Lansing. 

J.  W.  Beaumont,  Lansing. 

MISSOURI. 

E.  C.  Robinson,  St.  Louis. 

VERMONT. 

W.  H.  Proctor,  Brattleboro. 

T.  L.  Kinney,  South  Hero. 

WISCONSIN. 

A.  W.  Sanborn,  Ashland. 

D.  O.  Mahoney,  Viroqua. 

Ira  B.  Bradford,  Augusta. 

W.  H.  Hatten,  New  London. 

J.  W.  Powell,  Rosendale. 

James  A.  Frear,  Hudson. 

John  M.  Nelson,  Madison. 

C.  C.  Gittings,  Racine. 

The    following    delegates    were    subsequently    recorded    as 
present : 

National  Live  Stock  Association — 

^Mortimer  Levering,  Chicago,  111. 
National  Wholesale  Lumber  Dealers'  Association — 

G.  E.  Parker,  Sioux  City,  la. 
Northwestern  Hardwood  Lumberman's  Association — 

A.  H.  Barnard,  Minneapolis,  Minn. 


40 

GEORGIA. 

Savannah  Board  of  Trade — 
Savannah  Chamber  of  Commerce — 

W.  B.  Stillwell,  Savannah. 

ILLINOIS. 
Chicago  Live  Stock  Association — 
Mortimer  Levering,  Chicago. 

IOWA. 

Iowa  State  Manufacturers'  Association — 
H.  W.  Huttig,  Muscatine. 

MINNESOTA. 
Minnesota  Shippers'  and  Receivers'  Association — 
Geo.  S.  Loftus,  St.  Paul. 

NEW  YORK. 
New  York  Cotton  Exchange — 

W.  H.  Bartlett,  New  York  City. 

SOUTH  DAKOTA. 
Grocers'  Association — 

F.  Stewart,  Rapid  City. 
Chamber  of  Commerce  of  Weston — 

The  names  of  the  following  persons  appear  with  nothing  to 
indicate  the  organizations  represented  by  them : 

W.  B.  Conkey,  Chicago,  111. 
D.  F.  Shiefe,  Ft.  Wayne,  Ind. 
C.  H.  Chisam,  Council  Blufifs,  la. 
L.  C.  Boone. 

G.  A.  Charters. 
M.  Crume. 

W.  J.  Dunn. 
J.  C.  Ing. 
Wm.  Irvine. 
C.  W.  Sanborn. 

Summary  showing  the  number  of  organizations  represented 
at  the  Convention: 

National  and  Sectional  Organizations 31 

State  and  Local  Organizations,  as  follows : 

California    72  Mississippi 4 

Colorado 5  Missouri 2 

District  of  Columbia 1  Nebraska  6 

Georgia 3  New  York 5 

Illinois 17  Ohio 18 

Indiana  9  Oklahoma 2 

Iowa  10  Pennsylvania 4 

Kentucky  1  South  Dakota 4 

Kansas   10  Texas   6 

Maryland  1  Washington 1 

Massachusetts 1  Wisconsin   5 

Michigan   6                                             Total,     202 

Minnesota 9 


41 

Organizations  from  the  following  States  were  represented  by 
proxy : 


Arkansas   .  . . . , 

1              Missouri 

6 

Indiana 

Illinois 

1  New  York  — 

2  Ohio 

2 
5 

Iowa  

1              Rhode  Island  . 

1  Vermont 

2  Virginia  

1 

Kansas   

Massachusetts 

1 
1 

Michigan   

3             Wisconsin   .... 

2 

Minnesota  .  . . 

.       2 
represented    by    delegates 

Total,    - 
appointed 

31 

Congressional 
Governors 

Districts 

by 
.  ..     42 

Grand  Total.  . 

...  306 

Number  of  individual  delegates  present 

...  353 

Respectfully  submitted, 
(Signed)      J,  E.  Howard,  Chairman,  Wichita,  Kansas. 

J.  H.  Johnston,  Secretary,  Oklahoma  City,  Okla. 

F.  Q.  Story,  Los  Angeles,  Cal. 

I.  P.  Eumsey,  Chicago,  111. 

M.  P.  Buel,  Chicago,  111. 

F.  R.  Babcock,  Pittsburg,  Pa. 

Thos.  J.  Bray,  Grinnell,  la. 

Lewis  C.  Slade,  Saginaw,  Mich. 

E.  D.  Conger,  Grand  Rapids,  Mich. 

J.  W.  McCord,  Columbus,  0. 

T.  L.  Kinney,  South  Hero,  Vt. 

L.  C.  Whitney,  Milwaukee,  Wis. 

J.  W.  Kahle,  Seattle,  Wash. 

P.  E.  Waymer,  Jacksonville,  Fla. 

Scott  W.  Moore,  Louisville,  Ky. 

John  D.  Kernan,  Utica,  N.  Y. 

Jay  Laverty,  South  Omaha,  Neb. 

Eugene  F.  Verdery,  Augusta,  Ga. 

Theo.  R.  Ballard,  St.  lWs,  Mo. 

Clarence  A.  Kenyon,  Indianapolis,  Ind. 

J.  Z.  Keel,  Gainesville,  Tex. 

C.  E.  Stubbs,  Denver,  Col. 

W.  C.  B.  Robbins,  Boston,  Mass. 

Edwin  B.  Pike,  Pike,  New  Hampshire. 

George  S.  Loftus,  St.  Paul,  Minn. 

Edward  H.  Reed,  Wyncote,  Wyo. 

I.  M.  Humphrey,  Rapid  City,  S.  D. 

Committee. 

The  report  was  adopted,  with  one  vote  in  the  negative. 

The  Chairman:     "The  report  is  adopted.     We  will  hear 
Judge  Cowan  for  his  committee." 


42 

Judge  Co  wan  :  "Mr.  Chairman  and  Gentlemen  of  the  Con- 
vention :  The  report  of  your  Committee  on  Permanent  Organiza- 
tion is  as  follows:" 

Your  committee  hegs  leave  to  report  the  following  order  of 
business : 

First,  invocation.  The  committee  desires  to  explain  that 
because  of  the  excitement  and  the  apparent  disturbance  which 
proljably  was  due  to  the  corporate  influence  this  morning,  they 
forgot  to  have  an  invocation  at  the  opening  of  this  Convention. 

Second,  reports  of  the  committees. 

Further,  we  recommend  permanent  officers  of  this  Conven- 
tion as  follows : 

Chairman — Col.  W.  E.  Hughes,  Colorado. 

Vice  Chairman — Hon.  John  W.  Kern,  Indiana. 

Secretary — -P.  E.  Goodrich,  Indiana. 

Assistant  Secretary — George  A.  Schroeder,  Wisconsin. 

Your  committee  recommends  that  there  be  appointed  by  this 
Convention  an  Executive  Committee  of  fifteen  to  be  selected  by 
the  chairman,  to  carry  on  the  business  of  the  organization.  Your 
committee  further  recommends  that  a  Finance  Committee  be 
appointed  to  call  upon  the  delegates  present,  and  otherwise  raise 
the  necessary  funds  with  which  to  successfully  prosecute  the 
work  of  this  organization. 

Your  committee  further  recommends  that  a  Committee  on 
Eesolutious  be  appointed  by  the  chairman,  consisting  of  seven 
delegates,  to  which  shall  be  referred  all  resolutions,  without 
debate,  to  be  reported  back  to  the  Convention  with  such  recom- 
mendations as  the  comuiittee  may  see  proper  to  make. 

Further,  such  other  business  as  may  properly  come  before  the 
Convention. 

"Mr.  Chairman,  involved  in  a  motion  to  adopt  the  recom- 
mendations of  your  Committee  on  Permanent  Organization,  I 
take  it,  would  be  the  appointment  of  the  permanent  chairman 
of  your  meeting,  which  tbis  committee  has  seen  fit  to  propose. 
If  I  am  in  order,  there  is  a  word  upon  that  subject  I  would 
like  to  say." 

The  Chairman:    "You  are  in  order.    Proceed." 

Judge  Cowan  :  "Gentlemen  of  the  Convention :  The  matters 
which  we  are  called  here  to  pass  upon  are  matters  which  mark 
places  in  the  pages  of  history.  You  may  not  see  it  today.  You 
may  not  realize  it.  This  is  a  history  making  epoch.  Discoveries 
of  the  most  vital  character  to  the  success,  the  peace  fulness,  the 
prosperity  of  this  nation,  are  being  made  day  after  day.  A  few 
years  ago — or  I  need  not  make  it  so  many  as  that,  I  might  say 
one,  the  men  who  occupy  high  places  in  the  civic  affairs  of  this 


43 

countr}^  were  considered  above  reproach,  and  above  the  doing  of 
things  which,  to  their  shame  and  that  of  this  country,  be  it  said, 
the  discovery  has  been  made  they  have  done.    A  most  remarkable 
thing,  that  which  even  shocks  the  minds  so  much  we  scarce  would 
speak  of  it  to  each  other,  for  it  might  lead  to  the  suspicion  of 
our  neighbors.     It  has  not  been  long  since  those  who  desired  to 
regulate  some  of  the  larger  financial  institutions  of  this  country, 
who  desired  to  regulate  the  railroads,  were  charged  with  being 
socialists,  as  our  previous  speaker.  Governor  Van  Sant  has  well 
said.     The  time  was,  and  not  far  distant,  when  if  you  did  not 
advocarte  those  things  which  were  advantageous  to  capital  you 
were  challenged  as  V)eing  a  populist,  and  even  my  good  friend 
Senator  Harris,  who  sits  in  the  audience,  has  not  yet  passed 
out  from  under  the  recollection  of  that  charge  having  been  made 
against  him.     I  might  name  our  distinguished  compatriot  on 
the  stage,  who  has  been  in  favor  of  such  regulation  of  corporate 
affairs,  that  it  is  said  he  favored  populism  in  that  particular. 
Now  it  has  come  to  be  a  matter  of  common  talk  among  our 
wealthy  men — for  they  are  mostly  honest — among  the  men  -of 
affairs  who  have  made  their  property  and  who  run  the  affairs 
of  the  country,  that  there  must  lie  something  which  will  prevent 
the  improper  use  of  the  power  that  is  produced  by  wealth.     In 
naming  Col.  W.  E.  Hughes  as  the  chairman  of  this  Convention 
we  have  been  able  to  pick  a  man  who  has  made  his  way  from 
boyhood  poverty  to  mature  age ;  a  man  of  great  wealth ;  a  man 
who  is  a  banker ;  who  represents  trust  companies  which  he  owns ; 
who  has  his  millions;  but  a  man  withal,  who  has  not  forgot  that 
which  he  knew  when  he  was  a  boy,  which  he  realized  as  a  young 
man,  and  which  today  we  revere — the  patriotism  of  a  pure  Amer- 
ican citizen,  who  seeks  no  political  honor  and  fears  no  sort  of 
criticism.     It  is  a  pleasure  to  this  committee  who  happen  to 
know    Col.    Hughes    to    be    able    to    point   to    him    as    a    man 
who  has  come  in  to  this  Convention  willing  to  sit  here  as  a 
millionaire,  to  serve  as  a  chairman  of  a  body  which  seeks  to 
require  others  to  do  right,  and  yet  take  from  them  nothing  to 
which  they  are  entitled.     I  thank  you  gentlemen." 

The  Chairman  :  "Gentlemen,  you  have  heard  the  report 
of  your  Committee  on  Permanent  Organization.  What  is  your 
pleasure  ?" 

On  motion  the  report  was  unanimously  adopted. 

Judge  Cowan  :  "Mr.  Chairman,  I  move  that  Mr.  Buel,  of 
Chicago,  with  Senator  Harris,  be  requested  to  escort  Col.  Hughes 
to  the  rostrum." 


44 

The  chair  having  requested  the  gentlemen  named  to  escort 
the  permanent  chairman  to  the  platform,  they  performed  this 
pleasant  duty,  and  Col.  Hughes  was  introduced  to  the  Convention 
by  the  temporary  chairman. 

(Col.  W.  E.  Hughes  in  the  chair.) 

The  Chairman:  "Mr.  Higbie,  and  Gentlemen  of  the  Con- 
vention: After  thanking  you  most  heartily  for  the  high  honor 
conferred  upon  me  by  naming  me  as  your  permanent  chairman, 
which  I  sincerely  do,  the  only  regret  I  have  is  that  I  hardly  feel 
competent  to  serve  you,  and  fear  I  may  not  be  able  to  do  so  to 
your  satisfaction. 

Before  assuming  the  duties  of  the  chair,  it  may  not  be  amiss 
for  me  to  outline  in  a  general  way  the  situation,  and  what  I 
think  we  should  do.  As  you  know,  gentlemen  of  the  Convention, 
the  object  of  this  meeting  is  to  endeavor  to  impress  upon  the 
Congress  of  the  United  States  the  extent  and  persistency  of  the 
demand  that  comes  from  all  portions  of  the  country  that  the 
Interstate  Commerce  Commission  be  vested  with  power,  when  a 
given  railroad  rate  is  challenged,  after  investigation  and  final 
hearing  the  substitute  for  this  rate,  if  found  to  be  unreasonable 
or  unjust  or  discriminatory,  a  rate  that  at  once  goes  into  effect 
and  obtains  until  it  is  set  aside  by  the  courts,  or,  as  the  Presi- 
dent has  in  very  expressive  language  put  it,  "that  the  Interstate 
Commerce  Commission  be  vested  with  power  when  a  given  rate 
is  challenged  and  found  to  be  unreasonable  after  full  hearing, 
to  substitute  therefor  a  reasonable  rate  to  take  its  place,  this  rate 
to  go  into  immediate  effect  and  to  obtain  until  set  aside  by  a 
court  of  review." 

Now,  gentlemen,  it  is  conceded,  of  course,  under  the  clause 
in  the  constitution  vesting  in  Congress  the  right  to  control  for- 
eign commerce  and  commerce  between  the  states,  that  Congress 
unquestionably  has  the  right  to  fix  rates.  The  Supreme  Court 
of  the  United  States  has  declared  that  the  power  given  by  the 
constitution  to  regulate  commerce  means  the  power  to  prescribe 
the  rules  by  which  commerce  is  governed;  to  prescribe,  in  other 
words,  as  to  railway  traffic,  the  rate.  Now,  we  are  not  going 
to  ask  here  that  the  rate  making  power  be  taken  from  the  rail- 
roads and  given  to  a  Commission.  Kobody  has  asked  it.  We 
think  it  is  best,  as  far  as  possible,  for  the  rate  making  power  to 
remain  with  the  railroads,  the  owners  of  the  property.  It  is 
not  the  desire  or  the  policy  of  the  President  to  take  from  the 
railroads  the  rate  making  power  and  give  it  to  a  Commission. 
It  is  not  the  desire  that  Congress  should  assume  the  rate  mak- 
ing power,  although,  of  course,  as  to  all  corporations  engaged  in 
interstate  traffic,  Congress  has  the  right  absolutely  to  control, 


45 

to  regulate.  Of  that  there  is  no  question.  But  our  position  is 
(and  nobody  contends  for  anything  else)  that  there  be  a  power 
vested  somewhere  when  a  rate  is  successfully  challenged — a  given 
rate,  after  complaint  made,  to  determine  whether  that  rate  con- 
forms to  the  standard  fixed  by  Congress,  and  if  not,  to  substitute 
for  it  temporarily  a  rate  that  shall  go  into  immediate  effect  and 
shall  prevail  until  the  question  is  finally  passed  upon  by  courts 
having  jurisdiction.  That  is  our  position.  That  is  the  position 
of  the  President,  and  the  position,  I  think,  that  the  Convention 
understands  it  is  to  assume. 

~Now,  gentlemen,  we  from  the  west  are  not  unmindful — in 
fact  the  people  of  the  whole  country  are  not  unmindful  of  what 
the  railroads  have  done  for  us ;  they  have  brought  the  necessities, 
the  comforts,  even  the  luxuries  of  life  to  almost  every  door. 
They  have  hastened  the  development  of  the  country.  They  have, 
as  it  were,  made  the  wheels  go  faster.  That  is  about  all.  We 
had  transportation  before  we  had  railroads.  We  had  the 
Santa  Fe  trail  before  we  ever  heard  of  the  Santa  Fe  railroad. 
We  have  not  been  wholly  made  by  railroads.  The  Santa  Fe 
trail  from  the  Missouri  river  to  the  Eockies  was  lined  with  a 
species  of  transportation  that  we  were  used  to,  and  that  served 
us  in  a  way  long  before  we  had  the  Santa  Fe  or  a  single  Pacific 
railroad.  Gentlemen,  the  railroads  have  been  followers,  not 
pioneers.  This  long  line  of  white  topped  wagons  that  lined  the 
Santa  Fe  trail  and  all  our  highways  leading  westward,  with 
the  men  that  followed  beside  them,  heroes  from  New  England, 
from  every  eastern  state,  from  Maine  to  the  Carolinas,  from 
your  middle  west,  from  Illinois,  Indiana,  Kentucky,  Ohio,  these 
men  that  were  called  by  the  mystic  voices  from  the  west  that 
have  called  all  our  people,  the  ambitious  and  the  less  fortunate, 
these  were  the  men  who  developed  this  country. 

Of  course  the  railroads  have  assisted,  and  we  recognize  our 
obligations  to  them,  and  we  do  not  propose  to  disturb  one  dollar 
invested  in  railroads.  We  realize,  gentlemen,  that  the  potent 
factor  in  all  civilization  has  l)een  respect  of  property  rights. 
Nobody  proposes  to  disturb  any  investment  made.  And  where 
we  get  value  received,  where  the  public  gets  value  rceived,  we 
admit  that  the  common  carrier,  the  railroad,  must  have  a  just 
return  for  their  investment,  and  this  right  we  will  protect. 

But,  gentlemen,  corporations  must  be  controlled.  Thev 
must  be  controlled  by  government.  It  was  governments  that 
created  them.  True,  it  was  state  governments,  but  the  prin- 
ciple is  all  the  same.  It  has  made  them  persons — artificial 
persons,  and  given  them,  particularly  railroads,  more  rights  than 
you  possess.  The  right  to  absolutely  invade  your  domain, 
to  go  where  they  please;  to  tear  down  the  roof  that  covers 
your  family;  even  to  dig  up  the  bones  of  your  ancestors; 
that  is  what  a  railroad  can  do.     They  are  empowered  partially 


46 

by  government  with  sovereign  power,  and  wherever  these  cor- 
porations are  engaged  in  interstate  traffic  they  are  absolutely 
under  the  control  of  Congress.  Congress  has  already  done  the 
legislative  part  of  the  work  in  the  Act  to  Eegulate  Commerce. 
Congress  has  provided  that  all  railroad  rates  must  be  just, 
reasonable,  and  non-discriminatory.  The  standard  has  been 
fixed.  Now  when  a  given  rate  is  challenged,  after  complaint 
made,  it  is  a  mere  matter  of  detail,  a  mere  matter  of  adminis- 
tration, to  apply  this  questioned  rate  to  the  standard.  If  it  goes 
beyond  it,  it  is  clearly  within  the  province  of  any  administrative 
body  to  declare  what  would  l)e  reasonalile  and  to  substitute  this 
reasonable  rate  for  the  time  being.  I  do  not  think  there  is  any 
trouble  about  that.  The  courts  have  held  over  and  over  again 
that  Congress  can  delegate  this  power,  even  if  it  is  legislative, 
to  a  Commission.  I  do  not  undervstand  even  that  it  is  legislative. 
It  is  purely  administrative.  There  is  the  standard;  there  is  the 
questioned  rate.  Apply  the  standard,  and  if  it  is  an  overcharge, 
say  so.  Say  that  the  overcharge  will  not  prevail,  and  that  the 
maximum  rate  must  be  the  rate  prima  facie  until  set  aside  by 
the  courts. 

Now,  gentlemen,  I  do  not  mean  to  occupy  your  time 
long.  The  President,  as  you  know,  last  December,  at  the  last 
session  of  Congress,  in  his  message,  asked  that  the  Interstate 
Commerce  Commission  be  given  power  when  a  rate  is  challenged 
and  found  to  be  unreasonable,  to  substitute  another  to  go  into 
immediate  effect.  The  House  met  the  President's  suggestion 
by  a  vote  that  was  almost  unanimous.  But  tlie  Senate  was  not 
so  responsive.  The  Senate  side  tracked  the  matter.  Now,  gen- 
tlemen, this  question  is  up  to  us.  The  fight  is  on,  and  I  think 
we  should  have  committees  here  appointed,  representatives  of 
every  state,  to  go  right  after  our  respective  Senators;  let  them 
know  what  the  country  demands,  and  if  they  are  with  the 
President  and  with  the  people  on  this  measure  we  want  to  know 
it.  If  they  are  with  the  corporations  we  want  to  know  it.  I 
think  we  should  pass  the  necessary  resolutions  upon  this  suli- 
ject.  I  don't  think  we  need  a  great  deal.  A  simple  amendment 
prol)ably  of  the  present  act  to  regulate  commerce  with  power 
vested  somewhere.  I  see  no  better  place  than  the  Interstate  Com- 
merce Commission.  The  instrument  is  not  material,  but  as  the 
fight  is  along  those  lines,  power  vested  in  the  Interstate  Com- 
merce Commission,  when  a  rate  is  successfully  cliallenged,  after 
proper  complaint,  and  found  not  to  conform  to  the  legislative 
standard,  to  suspend  it,  correct  it,  set  it  aside  until  the  question 
is  finally  passed  upon. 

Now,  gentlemen,  is  the  opportune  time  for  us  to  move  in 
this  thing  while  we  have,  as  it  were,  a  friend  at  court.  President 
Eoosevelt — to  my  mind  the  best  representative  of  individualism 
in  this  country — gentlemen,  he  stands  for  all  that  is  best  and 


47 

cleanest  in  American  life  and  government;  now  is  the  time  to 
make  this  fight,  and  we  are  going  to  make  it.  We  want  to  take 
just  the  proper  steps.  We  all  understand  the  position.  Let's 
get  heartily  to  work ;  get  the  assistance  of  the  public  press.  Let 
the  people  of  the  country  understand  how  urgent,  how  persist- 
ent, how  universal  is  this  demand." 

Mr.  M.  p.  Buel:  "Mr.  Chairman,  we  should  like  to  hear 
from  the  vice  chairman." 

The  Chairman:  "Will  Mr.  Kern,  of  Indiana,  come  for- 
ward, please.  Gentlemen  of  the  Convention,  allow  me  to  intro- 
duce to  you  Mr.  Kern,  of  Indiana." 

Hon.  John  W.  Kern:  "I  thank  you  most  heartily  for  the 
honor  conferred  upon  me  by  selecting  me  for  vice  chairman  of 
this  Convention.  I  am  specially  thankful  because  I  am  assured 
that  it  is  an  office  to  which  no  duties  whatever  are  attached. 
I  think  I  said  this  morning  all  that  I  care  to  say  upon  the  sub- 
ject which  has  called  you  together,  and,  therefore,  content  my- 
self with  again  thanking  you." 

The  Chairman  :  "Gentlemen,  what  is  the  further  pleasure 
of  the  Convention  ?  Witli  the  copy  of  the  programme  before  me, 
the  first  thing  in  order  is  the  invocation." 

The  Convention  then  arose  while  Mr.  J.  Farley  delivered  the 
invocation. 

The  Chairman  :  "Gentlemen,  of  the  Convention,  the  next 
business  in  order  is  the  appointment  of  the  Committee  on  Reso- 
lutions.    The  chair  will  appoint  the  following  as  the  committee :" 

J.  H.  C^all,  California. 
^.  W.  :\rueller,  Illinois. 
E.  P.  Waldron,  Michigan. 
S.  H.  Cowan,  Texas. 
H.  A.  Holmes,  Kansas. 
E.  W.  Higbie,  New  York. 
John  D.  Kernan,  Xew  York. 
William  Larrabee,  Iowa. 
W.  E.  Harris,  Chicago. 


48 

The  Chairman  :  "The  Committee  on  Resolutions  may  retire 
and  proceed  with  its  work.  In  the  meantime  I  understand 
that  Senator  Frear  is  present,  and  there  is  a  request  made  that 
he  be  asked  to  address  the  Convention." 

Judge  Cowan  :  "Before  that  is  done,  a  communication  has 
been  sent  in,  if  you  will  permit  me  to  call  attention  to  it,  as  fol- 
lows: 

"A  committee  of  five  from  the  meeting  in  the  Studebaker  Hall, 
representing  460  delegates,  desires  to  make  a  statement  to  this 
Convention,  and  request  a  reply  thereto. 

(Signed)   J.  Kirby,  Jr.,  Ohio,  Chairman. 
J.  W.  Van  Cleve,  Missouri. 
Daniel  C.  Eipley,  Pennsylvania. 
Arthur  N.  Briggs,  California. 
George  W.  Scott,  California." 

Mr.  J.  H.  Call  :  "The  Executive  Committee  of  the  Interstate 
Commerce  Law  Convention,  as  is  well  known  to  the  members, 
has  received  definite  information  of  the  attempt  to  pack  this 
Convention  in  the  interest  of  railways  and  against  the  policy 
of  this  Convention  declared  at  St.  Louis,  and  declared  in  the 
call  for  this  Convention,  contrary  to  the  recommendation  of 
the  President.  We  learned  that  large  numbers  of  men  furnished 
with  transportation  had  been  brought  to  this  city  for  that  pur- 
pose; and  it  was  for  that  reason  that  we  attempted  to  protect 
this  Convention  and  the  public  in  general,  that  the  Convention 
might  not  be  packed  and  the  purposes  of  the  Convention  de- 
stroyed. The  gentlemen  who  came  here,  as  you  know,  have  met 
at  Studebaker  Hall.  They  now  send  a  communication,  and  ask 
to  be  heard  before  this  Convention.  They  have  refused  to  sign 
a  statement  of  principles  which  all  you  gentlemen  have  signed, 
and  upon  which  you  were  called  to  meet  here. 

I  desire  to  move  that  this  committee  be  requested  to  present 
their  statement,  if  they  desire  to  do  so,  in  writing,  and  that  it  be 
submitted  to  our  Committee  on  Credentials." 

The  motion  was  seconded. 

Mr.  F.  T.  Campbell  :  "I  move,  sir,  as  an  amendment  to  the 
motion  of  Judge  Call,  that  we  accept  a  statement  from  that  Con- 


40 

vention  in  writing,  and  refer  it  to  this  Convention  for  in- 
vestigation and  for  report  at  tomorrow's  session,  and  debate  over 
it  tonight  and  digest  it,  and  we  will  come  to  some  conclusion 
as  to  what  we  think  of  those  gentlemen  and  the  principles  that 
they  advocate,  and  perhaps  we  will  make  them  show  their  hands, 
gentlemen.  That  is  what  we  want  to  do.  We  want  them  to 
show  their  hands.  We  want  them  to  show  where  they  stand 
on  this  question.  That  is  what  we  want  to  do,  and  I  am  in  favor 
of  that  motion." 

Mr.  J.  H.  Call:  "Mr.  Chairman,  I  desire  to  accept  the 
amendment  that  has  been  offered  by  the  gentleman  from  Ohio. 
My  understanding  is  that  the  application  and  statements  be  pre- 
sented in  writing,  and  it  is  for  the  Convention  to  judge  whether 
they  are  entitled  to  speech  in  this  Convention  or  otherwise,  upon 
the  principles  stated  in  that  communication.'' 

The  motion,  as  amended,  prevailed. 

Judge  Cowan  :  "I  move,  sir,  that  the  chair  appoint  a  com- 
mittee of  three  to  communicate  with  the  gentlemen  who  are 
in  waiting  the  fact  that  this  Convention  has  by  a  motion  directed 
that  they  will  consider  any  statement  which  the  other  Conven- 
tion desires  to  present  in  writing,  and  submit  it  to  the  Conven- 
tion and  give  them  a  reply  tomorrow  morning,  and  that  you 
appoint  a  committee  of  three  to  inform  the  gentlemen  officially 
of  that  fact." 

Mr.  J.  B.  Daish  :  "I  suggest  that  inasmuch  as  the  communi- 
cation is  presented  by  five  we  ought  to  do  the  equal  thing  and 
send  five  to  talk  with  them,  and  not  send  three.  I  move  as  an 
amendment  to  the  motion  that  the  committee  be  made  five." 

Judge  Cowan  :    "I  accept  the  amendment." 

The  question  was  then  put  on  the  motion  as  amended,  and 
the  same  prevailed. 

The  Chairman  :  "The  chair  will  appoint  on  that  committee, 
Mr.  Cowan,  of  Texas;  Mr.  Call,  of  California;  Mr.  Buell,  of 
Chicago;  Mr.  Slade,  of  Michigan;  and  Mr.  Daish,  of  Washing- 
ton.    That  constitutes  the  committee,  gentlemen." 


50 

The  Chairman:  "Gentlemen^  it  has  been  requested  that 
Senator  Frear  address  j^ou.  Gentlemen  of  the  Convention,  I 
introduce  to  you  Senator  Frear,  of  Wisconsin." 

Senator  J.  A.  Frear:  "Mr.  Chairman  and  Gentlemen  of 
the  Convention :  It  is  an  honor,  of  course,  as  you  all  recognize,  to 
be  called  to  speak  on  such  an  occasion  as  this  when  practically 
every  member  of  the  Convention  is  a  public  speaker,  as  one 
recognizes  from  the  proceedings  which  have  been  held  here  at 
this  time.  And  equally  so  when  we  have  upon  the  stage  men 
like  the  distinguished  Governor  of  Minnesota,  whose  presence 
here  means  so  much;  and  equally  as  great  in  the  history  of  rail- 
road legislation  in  the  United  States  is  the  presence  of  the  dis- 
tinguished ex-Governor  of  Iowa  who  sits  at  my  right,  Governor 
Larrabee. 

It  may  be  presumptions  for  one  who  is  neither  a  railway 
expert  nor  shipper  to  offer  suggestions  on  railway  legislation  to 
this  representative  body  of  men  so  familiar  with  the  subject. 
We  will  all  agree  that  it  is  a  large  question  in  its  details,  but 
your  chairman  has  asked  me  to  speak  on  the  subject,  presumably 
from  the  fact  that  in  Wisconsin  we  have  successfully  passed 
through  the  same  struggle,  which  today  confronts  the  nation. 
After  a  period  of  several  years  hard  fighting,  within  the  past  six 
months,  we  have  secured  a  State  Commission  Law,  second  to 
none,  but  it  will  require  the  assistance  of  national  regulation 
to  secure  all  the  results  to  which  the  people  are  entitled. 

It  has  been  considered  high  praise  to  say  of  Governor 
La  Follette,  he  is  like  Prseidenf  Roosevelt.  No  greater  compli- 
ment could  be  accorded  any  public  man.  On  the  other  hand, 
in  view  of  the  remarkable  results  accomplished  in  Wisconsin, 
there  will  be  no  doubt  of  the  passage  of  a  strong  railway  rate 
regulation  law  ,if  President  Eoosevelt  is  as  persistently  deter- 
mined as  Wisconsin's  Governor  has  been.  The  whole  country 
knows  he  is  so  determined. 

In  view  of  the  startling  record  of  mismanagement  of  cer- 
tain insurance  companies  disclosed  within  the  last  few  weeks, 
which  has  astoimdecl  the  whole  country,  I  ask  to  briefly  speak  on 
the  subject  of  railway  rate  and  legislation  from  the  standpoint 
of  a  policy  holder.  President  McCurdy,  of  the  Mutual  Life,  is 
reported  to  have  said  that  the  prime  object  of  life  insurance  is 
not  to  benefit  the  policy  holder,  but  to  get  new  business.  Accord- 
ing to  standards,  Mr.  McCurdy  apparently  has  many  qualifica- 
tions which  fit  him  for  successful  railway  management.  High 
salaries,  extravagant  operating  expenses,  which  includes  enor- 
mous sums  of  money  given  to  lobby  and  campaign  funds,  illegal 
efforts  to  oppose  legislation,  palatial  quarters,  and  other  auto- 
cratic tendencies  mark  both  lines  of  business  as  conducted  today. 
The  officers  and  stockholders  get  all  the  proceeds  and  the  policy 


51 

holders^  who  support  the  business  get  no  consideration  in  either 
case. 

And  it  may  be  suggested  that  the  railway  policy  holders  are 
ten  times  more  numerous  than  those  of  the  insurance  companies. 
By  way  of  comparison,  the  total  number  of  policy  holders  in  the 
largest  insurance  company  in  the  country  number  several  hun- 
dred thousand.  On  the  other  hand  the  total  number  of  pas- 
sengers carried  by  the  railroads  in  the  past  year  amounted  to 
over  seven  hundred  million  and  these  passengers  were  all  policy 
holders  in  the  railroad  business.  Over  1,300  million  tons  of 
freight  were  transported  by  the  railroads  during  the  same  period. 
This  freight  was  paid  for  directly  or  indirectly  by  every  pro- 
ducer or  consumer  in  the  country.  Together  they  contributed 
during  the  past  year  approximately  $2,000,000,000  in  support 
of  the  railways  of  this  country  and  these  passengers,  producers 
and  consumers  are  the  railway  policy  holders  who  have  a  vital 
interest  in  your  deliberations  here  today. 

They  have  been  completely  ignored  thus  far,  by  both  par- 
ties to  the  controversy.  For  illustration,  prominent  railway  men 
and  leading  newspapers  ask  that  if  the  government  is  given 
power  to  change  rates,  these  rates  must  not  be  made  immedi- 
ately effective,  but  certificates  will  be  given  to  shippers  enabling 
them  to  collect  a  rebate  after  the  rate  has  been  sustained  by  the 
Court. 

Why  should  the  shipper  receive  a  rebate?  It  is  an  ele- 
mentary principle  that  the  shipper  deducts  the  freight  to  market 
when  paying  the  producer  for  his  grain  or  stock.  When  he  sells 
to  the  consumer  the  coal,  farm  machinery  or  the  thousand  and 
one  articles  to  be  consumed,  he  includes  the  freight  in  the  selling 
price  of  the  article. 

The  consumer  and  producer  pay  the  freight,  the  salaries, 
dividends  and  campaign  expenses  of  the  company.  The  shipper 
cares  nothing  ordinarily  for  the  rate  if  able  to  compete  with 
other  shippers.  The  amount  of  freight  rate  is  of  no  concern 
to  him  providing  other  shippers  pay  the  same  rate.  Thus  far 
in  this  movement  for  legislation,  the  shipper's  position  has 
clouded  the  entire  question,  and  notwithstanding  the  splendid 
results  achieved  by  your  organization,  if  I  may  be  pardoned  for 
so  saying,  possibly  it  has  retarded  action  through  a  failure  to 
unite  all  parties  in  interest.  Today  the  shipper  appeals  to  the 
Elkins'  law  and  secures  relief  from  rebates.  The  policy  holder 
on  the  other  hand  is  today  subject  to  unjustifiable  rates  and  has 
no  protection  under  the  law. 

In  your  legislative  campaign  you  have  thus  far  limited 
your  prayer  for  relief  to  the  shipper.  Why  not  extend  it  so 
that  every  one,  whether  he  be  shipper,  consumer,  producer  or 
railway  passenger  shall  realize  that  in  your  organization  he  has 
a  friend  in  court? 


52 

My  first  proposition  then  is  that  the  producers  and  con- 
sumers are  vitally  interested  in  this  legislation.  Shippers  must 
secure  their  active  co-operation,  must  work  for  the  public  wel- 
fare in  order  to  obtain  desired  results.  In  addition  to  demand- 
ing that  unjust  discrimination  shall  cease,  a  reduction  of  unjust 
freight  and  passenger  rates  must  also  be  demanded  wherever 
conditions  justify  the  relief. 

Today  the  railway  rate  maker,  in  the  words  of  President 
Stickney,  indulges  in  a  guessing  contest  and  is  only  limited  by 
the  rate  of  a  competing  line.  A  monopoly  of  the  trade  by  reason 
of  local  conditions  makes  him  an  autocrat  who  can  make  and 
unmake  entire  communities.  He  destroys  competition  by 
freight  rate  combinations  and  has  a  power  greater  than  any 
trust  magnate  who  can  be  named.  He  extorts  ten,  twenty  or 
thirty  per  cent,  annually  upon  tlie  investment  and  there  is  no 
redress  providing  he  extorts  without  discrimination.  He  may 
charge  all  that  the  traffic  will  bear  and  bleed  the  public  that 
gave  his  company  its  franchise ;  bleed  it  without  fear  of  the 
Sherman  anti-trust  law  or  any  other  legal  interference. 

The  greatest  monopoly  in  existence,  by  law  endowed  with 
almost  governmental  power,  is  practically  uncontrolled  in  its 
power  to  extort  money  from  the  public. 

When  a  money  leaner  in  Illinois  contracts  with  a  debtor 
for  a  rate  exceeding  seven  per  cent.,  you  cancel  the  contract  and 
relie^■e  the  debtor  from  the  payment  of  all  interest.  If  the 
contract  is  silent,  you  allow  him  only  five  per  cent.,  the  legal 
rate.  Should  he  collect  more  than  seven  per  cent.,  you  permit 
a  recovery  of  both  legal  and  illegal  interest  and  in  many  states 
fine  him  for  extortion. 

And  yet  our  public  servants,  the  railways,  the  creatures  of 
the  state,  where  there  is  only  one  party  to  the  contract,  one 
party  that  fixes  the  rate,  they  are  allowed  to  collect  twice  or  thrice 
seven  jier  cent,  profit  annually,  or  more,  if  they  demand  it,  and 
they  do  demand  it.  A  law  which  will  enable  the  policy  holder 
to  appeal  to  an  arbitrator  cannot  be  passed  through  Congress. 
Why  is  it?  Is  it  because  the  shippers  and  the  people  are  not 
united  in  this  contest,  or  is  it  because  the  railways,  like  the 
insurance  companies,  spend  millions  of  dollars  to  prevent  this 
legislation 

1  lia\e  hut  a  few  moments  in  which  to  present  this  phase  of 
the  subject,  but  t'ere  are  one  or  two  propositions  which  I  offer 
for  your  consideration.  First,  the  general  public  is  vitally 
interested  in  this  legislation  and  lias  absolutely  no  protection 
against  railway  extortion  under  existing  conditions.  Second, 
present  conditions  are  becoming  intolerable. 

It  was  disclosed  before  the  Senate  Committee  by  Prof.  Eipley 
that  during  the  past  five  years,  a  period  of  railway  combination, 
railway  freight  earnings,  instead  of  decreasing,  had  increased 


53 

on  an  average  over  five  per  cent.  Sevent3'-five  to  eighty  per 
cent,  of  the  freight  carried  was  on  low  commodity  rates  with  no 
appreciable  increase  in  its  average,  but  the  remaining  twenty-five 
per  cent,  covering  classification  rates,  was  increased  from  fifteen 
to  50  per  cent.,  or  on  an  average  over  twenty  per  cent.,  within 
that  period  in  order  to  make  this  enormous  general  average 
increase.  From  the  investigation  of  your  chairman  presented 
to  the  Plouse  Committee  at  the  last  session,  it  further  appeared 
that  the  increase  in  freight  tonnage  from  1900  to  1903  amounted 
to  ten  and  nine-tenths  per  cent.,  while  the  increase  in  freight 
revenue  amounted  to  twenty-five  and  six-tenths  per  cent.,  the 
revenue  increasing  two  and  one-half  times  as  fast  as  the  tonnage. 
It  further  appeared  that  the  net  earnings  per  mile  from  1899 
to  1903,  a  period  of  four  years,  increased  over  thirty  per  cent.; 
and  that  the  surplus  accumulated  by  the  railroads  within  the 
same  period,  including  the  amount  expended  for  permanent 
improvements,  and  after  paying  fixed  charges  and  dividends, 
was  $450,000,000,  or  considerably  over  $100,000,000  a  year. 

These  startling  figures  disclosing  an  outrageous  system  of 
railway  extortion  not  comprehended  by  the  public,  are  further 
supported  by  the  report  of  the  Interstate  Commerce  Commission, 
in  which  it  appears  that  if  the  rate  of  1899  had  been  in  force  in 
1903,  $155,000,000  would  have  been  saved  to  the  people  of  the 
country,  during  the  latter  year,  instead  of  being  wrongfully  di- 
verted into  the  pockets  of  eastern  capitalists.  The  testimony  of 
Mr.  Dean,  who  represented  the  fruit  growers  of  the  south  before 
the  tSenate  Committee,  showed  that  after  allowing  a  five  per  cent, 
annual  profit,  the  legal  rate  allowed  in  Illinois,  upon  all  the 
stock  of  the  railways,  a  large  percentage  of  which  w^as  watered, 
there  had  been  extorted  by  the  railways  of  the  country  since 
their  franchises  had  been  given  them  by  the  public,  the  enormous 
sum  of  $2,000,000,000.  And  yet  the  railway  experts  who  appear- 
ed before  those  Committees  could  see  nothing  unjust  or  unreason- 
able in  this  state  of  affairs.  The  railway  managers  of  the 
country  consider  the  rights  of  the  public  to  be  represented 
by  the  celebrated  expression  of  Mr.  Vanderbilt  and  that  public 
helplessly  submits  to  these  startling  conditions  because  Con- 
gress has  refused  to  listen  to  its  demand. 

Like  Standard  Oil  and  the  insurance  companies,  the  railways 
of  the  country  are  rapidly  increasing  their  extortionate  practices 
and  throttle  all  opposition  by  the  enormous  millions  which  they 
control. 

The  third  proposition  briefly  stated,  is  that  to  remedy  these 
conditions,  the  government  has  the  power  and  it  is  ite  duty 
to  regulate  freight  and  passenger  charges.  It  is  a  familiar  legal 
axiom  that  all  property  is  subject  to  those  general  regulations 
which  are  necessary  to  the  common  good  and  general  welfare. 


54 

As  applied  to  public  service  corporations  the  highest  court 
in  this  land  determined  many  years  ago  that  the  right  to  regu- 
late fare  and  freight  was  a  power  of  government.  It  cannot  be 
bargained  away  except  by  words  of  positive  grant.  The  only 
limitation  upon  this  broad  power  is  the  condition  that  a  rate 
fixed  by  legislative  enactment  must  not  be  confiscatory.  This 
doctrine  has  been  reiterated  many  times  by  the  United  States 
Supreme  Court. 

As  determined  in  the  Nebraska  case,  which  is  familiar  to 
every  lawyer,  the  railway  company  has  the  right  to  charge  only 
a  reasonable  profit.  In  determining  the  actual  investment, 
watered  stock  is  not  to  become  an  element  of  calculations. 
Again,  the  Supreme  Court  has  said  in  the  Michigan  case  and 
later  in  the  Texas  or  Regan  case,  that  the  court  in  determining 
reasonable  profits,  will  inquire  into  the  salaries  paid  high  offi- 
cials, and  other  items  of  railway  mismanagement  which  go  to 
make  up  wasteful  operating  expenses. 

What  would  the  court  determine  to  be  legitimate  operating 
expenses  in  the  case  of  one  prominent  western  road,  which,  dur- 
ing ten  years  expended  $13,000,000  in  permanent  improvements, 
charging  it  to  operating  expenses.  Yet  that  same  road  is 
obliged  to  declare  frequent  stock  dividends  in  order  to  divert 
public  attention  from  its  enormous  profits. 

Scarcely  two  weeks  ago  the  Great  Northern  Railway  Com- 
pany, one  of  the  parties  to  the  merger  agreement,  whose  stock 
on  the  market  is  quoted  at  three  hundred  and  twenty-five  per 
cent.,  indicating  an  actual  earning  capacity  of  from  twenty-five 
to  thirty  per  cent,  upon  its  property,  declared  a  stock  dividend 
of  $25,000,000,  to  be  issued  to  its  stockholders  at  par.  This 
stock  was  worth,  approximately,  on  the  market  $75,000,000, 
and  it  was  a  clear  gift  of  $50,000,000  to  the  stockholders,  in 
addition  to  the  annual  dividends  which  they  had  been  collect- 
ing. And  this  enormous  sum  of  money,  obtained  by  watering 
the  stock,  was  directly  paid  into  the  railway  treasury  by  the 
consumers  and  producers  of  the  country.  What  becomes  of  the 
decision  of  the  United  States  Supreme  Court  that  only  reason- 
able profits  can  be  exacted,  when  $50,000,000  is  filched  out  of 
the  public  purse  by  this  one  act  to  enrich  these  stockholders? 
The  stories  of  insurance  graft  are  recitals  of  petty  pilfering 
in  comparison  with  this  evidence  of  enormous  extortion  prac- 
ticed upon  a  helpless  public. 

But  this  road  is  not  alone  in  the  practice  of  watering  stock. 
The  Northwestern  road,  which  has  its  headquarters  in  this  city, 
with  stock  quotations  of  nearly  two  hundred  and  fifty  per  cent., 
and  earnings  computed  at  twenty-five  per  cent,  during  the  past 
year,  according  to  the  Wall  Street  Journal  and  other  reliable 
financial  authorities,  on  the  first  of  June  issued  $10,000,000 
stock  at  par  to  its  stockholders  and  authorized  the  issuance  of 


55 

a  far  greater  sum  at  the  same  time.  This  stock  so  issued  was 
worth  $20,000^000,  and  was  a  clear  gift  to  the  stockholders  of 
ten  millions.  The  Milwaukee  road  and  many  other  large  sys- 
tems of  the  country  are  constantly  employing  this  same  skillful 
system  of  financiering  in  order  to  cover  up  unreasonable  profits, 
which  are  extorted  under  present  conditions.  Who  enables  the 
Great  Northern,  the  Northwestern  and  other  roads  to  earn 
profits  of  twent}^  to  thirty  per  cent.,  so  that  the  stock,  although 
frequently  watered,  remains  quoted  at  two  hundred  to  three 
hundred  per  cent,  of  its  par  value ;  and  who  enables  many  other 
roads  that  could  be  mentioned,  to  pay  dividends  on  huge  blocks 
of  watered  stock  ? 

If  a  Chicago  bank  official  charges  eight  per  cent,  for  the  use 
of  money  you  arbitrarily  punish  him  by  depriving  him  of  all 
interest  upon  his  loan.  No  matter  what  the  character  of  his  se- 
curity may  be,  no  matter  what  chances  he  takes  in  making  the 
investment.  And  yet  Congress  refuses  to  give  us  the  right  to 
remedy  railway  extortion  where  the  profits  are  three  or  four 
times  the  highest  interest  rate  allowed  in  this  state. 

This  brings  me  to  the  last  proposition.  Having  conditions 
that  need  regulating  and  having  the  power  to  regulate,  if  you 
choose  to  use  it,  why  does  not  Congress  extend  the  protection 
which  should  have  been  given  to  the  people  nearly  a  half  century 
ago.  A  leading  insurance  company  admits  it  contributed 
nearly  $50,000  to  the  last  political  campaign  and  has  contributed 
large  amounts  to  prevent  injurious  legislation,  and  the  whole 
country  is  astounded  over  the  lack  of  business  honesty  disclosed 
by  President  McCall  and  other  insurance  men  in  the  manage- 
ment of  their  company.  But  I  have  here  a  clipping  from  a 
reputable  Chicago  paper  (the  Eecord-Herald),  one  of  the  lead- 
ing papers  of  the  country,  published  about  two  weeks  ago,  which 
declares  tliat  the  railways  are  contributing  a  million  and  a  half 
dollars  annually  to  defeat  proposed  railway  legislation.  During 
the  past  year  it  was  currently  reported  that  the  railways  con- 
tributed over  one  hundred  thousand  dollars  for  campaign  pur- 
poses in  Wisconsin.  The  money  was  expended  in  disorganizing 
the  opposition  to  the  companies,  in  infiuencing  leading  shippers 
to  oppose  legislation,  in  supporting  expensive  lobbies,  defeating 
objectionable  law  makers  and  in  a  thousand  and  one  ways  which 
railway  companies  have  grown  to  consider  legitimate.  At  the 
legislative  session  of  1903  in  Wisconsin,  three  hundred  shippers 
surrounded  the  railway  attorneys  and  applauded  their  every 
argument.  Tliey  also  passed  resolutions  against  the  Governor 
for  stating  they  received  rebates.  At  the  legislative  session  of 
1905  not  a  shipper  appeared.  Why?  Because  it  had  been  dis- 
closed by  an  examination  of  the  railroad  books  made  by  the 
Sta^e  Eailway  Commissioner  that  many  of  these  shippers  had 
been   receiving  milawful  rebates   and  other  favors   during  the 


56 

past  five  or  six  years  and  that  those  rebates  within  that  period 
amounted  to  a  sum  stated  by  the  Wisconsin  Eailway  Commis- 
sioner to  be  over  five  millions  of  dollars. 

Who  pa3^s  these  millions  annually  contributed  by  the  railway 
companies  to  defeat  legislation?  It  is  the  involuntary  policy- 
holder who  pays  legitimate  dividends  and  interest  upon  the 
bonds  and  then  contributes  between  one  and  two  hundred  mil- 
lion dollars  in  extortion  every  year,  furnishing  the  money  with 
which  to  defeat  the  passage  of  laws  intended  to  protect  his  own 
interest. 

Why  criticise  McCall,  McCurdy,  Hyde  and  the  rest  of  the 
small  insurance  grafters  of  the  country  while  we  remain  silent 
over  the  Harrimans,  Eockefellers,  Hills,  Vanderbilts  and  other 
railway  magnates,  who  practically  control  all  the  railway  sys- 
tems of  the  country,  and  unite  to  control  legislation,  contribute 
millions  of  dollars  for  campaign  purposes,  dividing  incalculable 
wealth  annually  among  a  handful  of  eastern  stockholders  while 
their  agents  traverse  the  country  seeking  to  purchase  the  public 
press  and  stifle  the  public  conscience.  This  is  the  real  issue 
which  confronts  us  and  it  is  frivolous  to  discuss  statistical  tables 
showing  comparative  conditions  in  Europe  and  America,  or  other 
irrelevant  issues,  when  the  proposition  is  simply  one  of  common 
justice  between  the  people  on  the  one  hand  and  the  public  ser- 
vice corporations  on  the  other.  The  situation  in  this  country 
which  enables  Standard  Oil  to'  fix  the  price  of  oil,  the  beef  trust 
the  price  of  eatables,  the  steel  trust,  the  harvester  trust,  the  coal 
trust,  to  fix  the  price  of  materials,  is  the  same  situation  which 
confronts  us  on  the  railroad  question.  These  monopolies  have 
been  built  up  by  railway  discrimination,  and  the  railways  them- 
selves, the  greatest  monoplies  of  all,  the  public  service  corpora- 
tions, are  managed  without  regard  to  the  public  welfare  except- 
ing as  it  incidentally  becomes  of  interest  to  the  stockholders. 

Prominent  railway  men  profess  to  fear  government  regula- 
tion declaring  it  to  be  a  political  movement,  and  ofl'er  other  triv- 
ial arguments  in  opposition.  Like  the  insurance  officials,  they 
ask  to  be  let  alone,  ignoring  the  fact  that  an  honest  and  conserv- 
ative management  of  these  companies  could  not  be  interfered 
with  nor  could  any  injury  be  inflicted  upon  them  by  the  estab- 
lishment of  a  tribunal  having  power  to  regulate  rates.  The  pub- 
lic would  not  injure  the  railways  if  it  could,  and  could  not  if  it 
would.  The  Courts  have  always  prevented  any  injustice  which 
might  occur  through  ill-advised  regulation.  They  have  always 
enjoined  confiscatory  rates.  They  will  protect  the  rights  of  capi- 
tal when  invested  in  railways  and  no  legislative  action  can  de- 
stroy this  right.  Why  then  does  Congress  hesitate  and  why  are 
members  of  the  Senate  reported  as  standing  "pat"  on  railway 
legislation. 


57 

The  great  leader  of  the  nation  has  taken  up  the  cudgel  in 
the  interests  of  a  ''square  deal"  and  is  fighting  your  battle. 
President  Eoosevelt  must  have  the  active  co-operation  of  your 
body  in  demanding  a  commission  with  full  power  to  initiate  com- 
plaints and  correct  rates.  This  organization,  which  meets  here 
today,  for  years  has  been  endeavoring  to  secure  needful  railway 
legislation.  Its  efforts  will  be  crowned  with  success,  and  when 
the  law  has  been  eventually  placed  upon  the  statute  books  by 
Congress,  your  distinguished  Chairman  and  his  co-laborers  in 
this  work  will  be  entitled  to  the  grateful  acknowledgment  of  the 
entire  people.  But  in  order  to  assist  this  work,  to  control  the 
creatures  of  the  law,  the  railways,  which  look  to  the  states  for 
their  franchises  and  protection,  you  must  first  see  to  it  that  these 
great  corporations  no  longer  control  us  through  the  power  they 
exercise  at  Washington.  Do  not  advocate  or  consent  to  the 
passage  of  a  half  hearted  measure,  but  demand  from  Congress 
the  right  which  belongs  to  the  Government — the  complete  super- 
vision of  the  railways  with  power  to  secure  reasonable  rates. 

The  demand  must  be  made  in  no  uncertain  tones.  We  of 
Wisconsin,  as  one  of  the  fruits  of  our  gi-eat  victory,  pledge  you 
the  support  of  the  new  Senator  from  that  state.  He  will  stand 
on  this  question  side  by  side  with  President  Eoosevelt.  We  do 
not  promise  you  unreasonable  things  when  we  say  that  no  matter 
how  far  his  usefulness  may  be  temporarily  handicapped  by  condi- 
tions, he  will  be  a  friend  in  court,  who  will  give  assurance  to 
the  best  of  his  ability  of  a  fair  hearing  and  an  honest  determina- 
tion of  the  great  question  which  confronts  us.  He  has  never 
been  found  wanting  in  the  defense  of  public  rights.  He  never 
will  be.  The  distinguished  ex-Governor  from  Minnesota  is  with 
us  today.  The  man  who  won  a  great  fight  almost  single-handed 
against  the  merger.  The  agitation  in  that  state  to  remove  it 
from  the  domination  of  the  Hill  railway  influence  gives  promise 
of  assistance  from  that  quarter. 

And  the  home  of  the  great  Emancipator,  of  Lincoln  and  of 
Douglas.  Forty  years  afterward  the  home  of  the  Lorimer  ma- 
chine, where  we  meet  today.     What  of  this  state  ? 

And  what  of  Ohio,  the  home  of  Chase,  Garfield  and  McKin- 
ley?  We  have  a  recent  expression  from  the  Senior  Senator  of 
that  state. 

I  will  read  from  Senator  Foraker's  speech,  delivered  in  the 
State  of  Ohio  upon  this  railway  rate  question,  where  he  says: 
"A  better  way  may  be  found  of  making  these  rates  than  that 
now  in  vogue,  but  I  do  not  believe  it  possible  for  Congress  to  do 
it  by  intrusting  such  a  complicated  duty  to  any  such  agency  as 
has  been  proposed.  To  take  control  of  the  rate  making  power 
is  to  take  charge  of  the  revenues  of  the  road.  If  the  Govern- 
ment is  to  determine  how  much  money  it  shall  be  allowed  to 
make,  it  must  of  necessity  determine  also  what  expenditure  shall 


58 

be  permitted.  None  of  tliese  things  can  be  escaped.  None  of 
them  can  be  done  b}'  the  Government  as  \yell  as  they  are  now 
being  done  by  the  companies  themselves."  That  is  his  response 
to  the  President's  request. 

From  this  statement  it  appears  the  distinguished  Senator 
from  that  state  ignores  the  excellent  work  of  the  Interstate  Com- 
merce Commission,  of  all  the  different  state  commissions,  of 
Canada,  of  Great  Britain  and  above  all  he  ignores  the  Supreme 
Court  decision  upon  this  express  point. 

If  you  will  permit  me  I  will  read  several  lines  from  the  de- 
cision of  Justice  Brewer  in  the  -Wellman  case,  known  as  the  pas- 
senger case  of  Michigan,  in  which  the  court  speaks  of  the  very 
proposition  which  Senator  Foraker  has  so  ably  laid  down.  The 
court  said,  through  Justice  Brewer  in  that  case,  found  in  the 
43rd  United  States  Eeports :  "Of  what  do  these  operating 
expenses  consist?  Are  they  made  up  partially  of  extravagant 
salaries,  fifty  to  a  hundred  thousand  dollars  to  the  President, 
and  in  like  proportion  to  subordinate  officers?  Surely  before 
the  courts  are  called  upon  to  judge  an  act  of  the  legislature  fix- 
ing the  maximum  passenger  rate  for  railroad  companies  to  be 
unconstitutional,  on  the  ground  that  its  enforcement  would  pre- 
vent the  stockholders  from  receiving  any  returns  from  their  in- 
vestment, or  the  bond  holders  from  receiving  any  interest  on 
their  loans,  they  should  be  fully  advised  as  to  what  is  done  with 
the  receipts,  and  the  earnings  of  the  company."  That  is  the 
language  of  the  court.  "For  if  so  advised  it  might  clearly  ap- 
pear that  prudent  and  honest  management  would,  within  the 
rates  prescribed,  secure  reasonable  dividends.  While  the  protec- 
tion of  vested  rights  of  property  is  the  supreme  duty  of  the 
courts,  it  has  not  come  to  this,  that  the  legislative  power  rests 
subservient  to  the  discretion  of  any  railroad  corporation  which 
may  by  exorbitant  or  unreasonable  salaries,  or  in  some  other 
improper  way  transfer  its  earnings  into  wliat  it  is  pleased  to  call 
operating  expenses." 

That  is  not  populistic  doctrine,  my  friends.  If  so,  it  has 
been  uttered  by  the  United  States  Supreme  Court,  founded  upon 
the  constitution. 

And  what  of  Indiana,  Iowa  and  other  Western  states?  Are 
the  railway  political  machines  in  these  states  strong  enough  to 
override  public  opinion?  It  seems  incredible  that  the  servants 
of  the  people  will  be  greater  than  their  masters. 

If  you  would  bring  about  a  consummation  of  the  result  de- 
sired by  every  citizen,  who  is  a  policyholder  of  the  railways,  voice 
your  demand  loud  enough  to  reach  the  ears  of  men  who  have 
been  accepting  $20,000  retainers  from  life  insurance  companies 
and  salaries  from  railroad  companies  exceeding  those  of  the 
President  while  ostensibly  representing  the  people  at  a  salary 
of  $5,000  a  year.     Voice  your  demand  loud  enough  so  that  men 


59 

proposed  for  high  office  will  reach  the  position  because  they  stand 
for  right  principles.  You  may  not  have  a  million  and  a  half 
dollars  annually  with  which  to  influence  the  result,  but  you  have 
80,000,000  people  to  whom  you  can  appeal.  Today  they  are  the 
railway  policyholders  who  are  annually  pouring  over  a  hundred 
million  dollars  of  surplus  earnings  into  the  pockets  of  a  handful 
of  men  on  Wall  street.  Once  arouse  these  policy  holders  and 
all  the  millions  of  the  railway  combinations  will  go  for  naught. 
This  is  the  purpose  of  President  Eoosevelt.  His  messages  to 
Congress  and  his  speeches  throughout  the  country  are  educating 
the  masses.  And  the  one  body  of  men  that  can  uphold  his  hands 
in  this  great  fight  is  the  one  that  meets  here  today.  His  victory 
is  ours  and  ours  is  the  people's." 

The  Chairman  :  ''The  Chair  is  informed  that  the  last  com- 
mittee appointed  desires  to  report."  (The  committee  appointed 
to  communicate  with  a  committee  appointed  by  a  meeting  in  ses- 
sion at  Studebaker  Hall). 

Mr.  M.  p.  Buel  :  "Mr.  Chairman  and  Gentlemen,  you  under- 
stand that  Judge  Cowan  was  the  chairman  of  this  committee,  but 
it  seems  that  he  had  to  go  elsewhere,  and  he  imposed  on  me  the 
duty  of  making  this  report.  We  desire  to  report,  Mr.  Chairman, 
that  we  met  the  gentlemen,  consisting  of  five  members  from  an- 
other convention.  They  stated  a  proposition  to  us  that  they 
had  been  instructed  to  come  and  say  to  us  that  they  were  the 
Convention,  and  that  they  asked  us  to  come  and  join  hands  with 
them.  Our  chairman.  Judge  Cowan,  said  to  them  that  our  in- 
structions were  simply  to  receive  from  them  in  writing  any 
proposition  that  they  wanted  to  submit  to  this  body.  They  had 
in  writing  a  resolution,  I  would  infer,  which  by  the  instructions 
of  our  Chairman,  I  will  read :" 

"Be  it  further  resolved,  that  inasmuch  as  there  is  an  over- 
whelming majority  of  the  duly  accredited  delegates  here  pres- 
ent, we  declare  this  to  be  the  duly  called  convention. 

"Be  it  further  resolved,  that  a  committee  of  five  be  appointed 
by  the  Chair  to  so  notify  the  minority  delegates  now  in  session 
in  Steinway  Hall,  and  invite  them  to  be  present." 

"Your  committee  simply  has  discharged  the  duty  imposed 
upon  it,  and  makes  this  report  without  recommendations." 

Mr.  John  W.  Kern  :  "I  ask  unanimous  consent  for  the  in- 
troduction of  the  following  resolution:" 


60 

"Resolved,  That  the  so-called  convention  assembled  in 
Studebaker  Hall  for  the  purpose  of  aiding  the  railroad  compan- 
ies to  defeat  the  efforts  of  President  Roosevelt  in  behalf  of  the 
people,  has  assembled  without  authority  of  this  association,  and 
fairly  represents  the  corporate  forces,  under  the  direction  of 
which  it  is  in  session. 

Second,  that  its  statement  to  the  effect  that  any  duly  ac- 
credited delegates  to  this  Convention  are  in  attendance  upon 
the  Studebaker  Hall  Railroad  Convention  is  absurd  and  false. 
The  delegates  to  this  convention  are  here  in  session,  enthusiastic 
in  their  support  of  President  Roosevelt's  declared  policy,  and 
propose  to  make  no  alliances  or  compromises  with  the  enemies 
of  the  people." 

The  resolutions  were  unanimously  adopted. 

The  Chairman  :  "The  Chair  requests  that  all  those  that 
have  resolutions  present  them  in  writing,  and  they  will  be  re- 
ferred to  the  Committee  on  Resolutions." 

Judge  S.  H.  Cowman:  "I  want  to  request  the  Chair  to  an- 
nounce to  all  the  delegates  that  the  Resolutions  Committee  will 
undertake  to  pass  on  any  resolutions  they  can  get  hold  of  tonight, 
and  will  probably  have  some  important  resolutions  to  report  here 
by  10  :30  tomorrow  morning,  and  to  request  that  the  Chair  urge 
it  upon  the  members  to  all  be  present  at  10 :30  A.  M.  tomorrow, 
in  order  that  they  may  pass  on  the  material  matters  that  will  go 
out  of  this  convention,  expressive  of  its  judgment  and  sentiment 
on  the  points  for  which  we  were  called  here. 

Having  made  that  request,  I  desire  now  to  call  the  Chair's 
attention  to  the  fact  that  the  report  of  the  Committee  on  Per- 
manent Organization  recommended  the  appointment  of  a  Fi- 
nance Committee,  for  the  purpose  of  providing  ways  and  means 
and  money." 

The  Chairman:  "The  Chair  will  appoint  that  committee 
in  the  morning  unless  the  Convention  prefers  to  assist  the  Chair 
by  suggesting  names  now." 

The  Chairman  :  "We  have  a  telegram  from  the  chairman 
of  the  Executive  Committee." 

Mr.  R.  W.  Higbie  :  "At  the  morning  meeting  your  temporary 
chairman  was  directed  to  send  a  telegram  to  Mr.  Bacon.  I  sent 
it,  and  have  received  the  following  reply:" 


61 

"Your  greeting  and  expression  of  confidence  are  greatly  ap- 
preciated. My  inability  to  be  present  is  a  severe  trial.  I  have 
full  confidence  in  the  energy  and  determination  of  the  Conven- 
tion to  support  President  Eoosevelt  in  his  wise  policy  of  rate 
regulation.     (Signed)  E.  P.  Bacon." 

Mr.  W.  R.  Farley  :  "I  move  the  convention  stand  adjourned 
till  9  :30  tomorrow  morning.'" 

The  motion  was  carried,  and  the  com-ention  adjourned  until 
9  :30  A.  M. 


THIED  SESSION. 

Chicago,  III.,  Oct.  21,  1905. 

The  third  session  of  the  convention  was  called  to  order  at 
9:30  A.  M.  on  Friday,  October  27,  by  Chairman  Hughes. 

Mr.  Murdo  Mackenzie  :  "Mr.  Chairman,  Gentlemen  of  the 
Convention :  I  was  unavoidably  absent  yesterday.  Nothing 
has  happened  for  a  long  time  that  I  regretted  so  much,  but  it  is 
something  over  which  I  had  no  control." 

The  CHAiRMA>f :  "Mr.  Mackenzie  is  a  member  of  the  Ex- 
ecutive Committee,  gentlemen,  and  is  the  best  worker  we  have 
in  the  west.  He  has  this  honest,  direct,  Scotch  way  of  doing 
things  and  saying  things.  ^Ir.  ^lackenzie,  we  want  to  hear 
from  you." 

Mr.  Mackenzie:  "Xow.  gentlemen,  Ave  are  in  a  great  fight. 
Yesterday's  proceedings  will  give  you  an  idea  of  what  we  have 
to  stand  up  against.  We  have  the  moneyed  power  of  the  east, 
the  moneyed  power  of  Wall  street  against  us,  and  it  is  for  you 
gentlemen  to  stand  up  and  make  one  of  the  most  glorious  fights 
that  was  ever  made  in  this  country.  I  don't  think  I  have  to 
ask  you  to  do  this,  because  I  see  Ijefore  me  gentlemen  who  have 
been  witli  me  and  with  my  friend  the  Chairman  in  this  fight, 
and  with  many  others  whom  I  see  in  the  audience,  for  years 
past.  Now  our  hour  is  here.  All  we  have  to  do  is  to  take  ad- 
vantage of  it.  Let  us  not  go  home,  gentlemen,  and  say  all  the 
work  was  done  here.     It  is  only  commencing. 

Now.  gentlemen,  we  want  to  make  the  railroad  companies 
feel  in  this  fight  t^at  we  are  in  earnest,  and  that  there  is  no 
graft  about  us;  that  we  want  something  not  for  the  benefit  of 
one  community  or  one  individual,  but  for  the  whole  people  at 


62 

large.  Now,  gentlemen,  that  is  what  we  are  after.  That  is 
the  kind  of  bill  we  want.  We  don't  want  a  bill  that  will  benefit 
one  single  community.  We  don't  want  a  bill  that  will  benefit 
one  single  industry.  We  don't  want  a  bill  that  will  support  or 
help  the  New  England  states,  or  the  manufacturers,  or  any 
particular  section  or  interest.  We  want  a  bill,  gentlemen, 
that  will  protect  the  producers  and  the  consumers  of  this 
country.  They  are  the  men  whom  we  are  here  to  support. 
And  I  ask  you,  gentlemen,  I  ask  every  man  here,  every  dele- 
gate to  this  Convention,  to  go  home  and  try  to  get  as 
many  converts  to  our  cause  as  he  can.  The  only  thing  there 
is  to  tell  them  is  to  explain  our  position.  All  he  has  to 
do  is  to  explain  to  the  ordinary  consignor  of  this  country  that 
we  are  here  to  help  him,  that  we  are  here  to  get  a  square  deal 
for  him.  And  whenever  you  show  him  that  I  say  to  you,  gen- 
tlemen, that  the  country  will  be  swept  from  one  end  to  the  other 
in  favor  of  our  grand  president,  and  we  shall  get  a  bill  when 
Congress  meets  that  will  surprise  even  the  railroads.  I  thank 
you,  gentlemen,  for  listening  to  me." 

Mr.  F.  T.  Campbell:  "Mr.  Chairman,  I  rise  to  a  personal 
explanation  this  morning.  The  Chicago  press  has  generally 
treated  this  Convention  very  fairly  in  its  reports,  for  which  this 
Convention  is  thankful.  They  want  nothing  but  a  fair  report. 
But  the  Chicago  Post  last  night,  in  an  article  which  is  inspired 
by  railroad  sources,  branded  Col.  John  W.  Kern,  of  Indiana, 
and  your  humble  servant,  Mr.  Campbell,  of  Ohio  (not  ex-Gov- 
ernor Campbell,  as  some  of  the  papers  here  have  reported),  as 
socialists.  The  Chicago  Evening  Post  said :  "Among  those 
who  spoke  and  insinuated  that  all  those  in  the  other  meeting 
were  being  paid  by  the  railroads  were  John  W.  Kern,  of  Indiana, 
and  F.  T.  Campbell,  a  former  railroad  commissioner  of  Iowa. 

Each  was  earnest  in  describing  the  need  of  rate  legislation. 
Mr.  Campbell  asserted  that  socialism  would  control  at  the  next 
election  if  rates  are  not  placed  in  the  hands  of  a  new  Interstate 
Commerce  Commission." 

Mr.  Campbell  did  not  say  anything  of  that  kind.  Mr.  Camp- 
bell has  no  sympathy  with  socialism.  Mr.  Campbell  wears  a 
button  (Mr.  Campbell  here  pointed  to  the  G.  A.  E.  button  in 
his  lapel),  that  is  testimony  enough  to  him  and  the  people  of 
this  country  that  he  is  not  in  sympathy  with  socialism  nor  an- 
archy. 

You  have  two  kinds  of  anarchists  in  this  country,  gentlemen, 
and  there  are  those  who  in  high  places  ought  to  know  better, 
who  are  as  much  anarchists  as  those  in  the  gutter,  when  it  comes 
to  disobeying  and  setting  at  defiance  the  law.  I  am  the 
editor  of  the  Lima  Daily  Gazette,  disseminating  truths  in  fa- 
vor   of    rate    legislation,    and    the    position    of    the    President, 


63 

and  I  am  going  home  to  take  up  that  fight  for  the  future.  I 
realize  the  magnitude  of  the  fight  that  we  have  on  our  hands, 
and  I  don't  want  to  be  written  do^vn  as  a  socialist  for  the  purpose 
of  destroying  my  influence,  and  I  want  the  press  to  state  where 
I  stand  on  this  question.  I  am  for  the  President  and  the  posi- 
tion he  occupies  in  favor  of  reasonable  legislation,  such  as  was 
recognized  as  lawful,  and  for  ten  years  constitutional,  until 
the  court  set  it  aside.  We  want  to  get  right  back  to  the 
position  where  we  were.  That  is  where  we  stand,  gentle- 
men. I  have  no  sympathy  with  socialism.  But  I  do  say,  and  I 
said  it  then,  that  if  the  kind  of  rate  legislation  that  we  are  ad- 
vocating here  is  socialism,  we  are  all  socialists.  We  have  been 
branded  by  the  railroads  as  socialists,  and  that  is  where  that  re- 
mark came  from.  I  have  no  sympathy  with  socialism.  I  want 
to  be  set  right  on  that  question." 

The  Chairman  :  "Gentlemen  of  the  Convention,  the  report 
of  the  Committee  on  Permanent  Organization  yesterday  made  it 
the  duty  of  the  Chair  to  appoint  a  finance  committee..  The 
Chair  makes  the  following  appointment  of  the  Finance  Commit- 
tee :" 

R.  S.  Lyon,  Illinois. 

J.  M.  Mason,  West  Virginia. 

J.  T.  McHugh,  Ohio. 

Murdo  Mackenzie,  Colorado. 

F.  Q.  Story,  California. 

"Gentlemen,  I  am  informed  that  the  Resolutions  Committee 
will  very  soon  be  ready  to  report.  That  is  one  of  the  first 
things  we  want  to  get  before  the  Convention  this  morning.  The 
report  is  due  at  10  :30.  I  am  advised  they  will  be  here  now  in 
five  or  ten  minutes." 

Mr.  George  J.  Kindel:  "If  you  have  five  minutes  to  spare, 
could  I  relate  some  of  our  experiences  with  Colorado  freight 
rates." 

The  Chairman  :  "Mr.  Kindel,  we  shall  be  pleased  to  hear 
from  you." 

Mr.  Kindel:  "Mr.  Chairman  and  Gentlemen  of  this  Con- 
vention :  I  presume  as  a  layman  I  have  had  more  experience 
with  the  Interstate  Commerce  Commission  both  in  Washington 
and  in  Denver  than  any  other  one  citizen.  I  hold  in  my  hands 
a.  brief  on  the  last  case,  that  of  cotton  piece  goods.     The  facts 


64 

in  this,  briefly  stated,  are  these :  Cotton  piece  goods  are  shipped 
from  Atlantic  coast  to  Pacific  coast  points  at  ninety  cents  a 
hundred  in  car  lots.  This  same  cotton  piece  goods  which  enters 
into  my  business,  that  of  bedding  mannfacturer,  I  have  to  pay 
$2.24  to  drop  it  ofE  at  Denver.  McClure's  Magazine  for  No- 
vember has  an  article  in  it  that  refers  to  a  merchant,  who  is  my- 
self, who  gave  them  their  points,  but  they  conservatively  stated 
that  Denver  was  a  thousand  miles  shorter  haul,  while  the  fact 
is  we  are  fifteen  hundred  miles  shorter  haul.  And  they  mention 
classification.  The  thing  we  need  most  is  to  get  a  universal  clas- 
sification. Cotton  piece  goods,  as  perhaps  you  are  not  aware, 
is  classified  in  eastern  classification  as  fifteen  per  cent  less  than 
second  class ;  fourth  class  in  the  southern ;  third  class  in  the 
Chicago ;  first  class  in  the  western  classification,  which  gets  us 
in  the  105th  meridian :  and  one-third  of  first  class  in  the  trans- 
continental tariff.  Chicago  pays  from  here  to  Omaha  twenty 
mills  per  ton  per  mile,  while  Omaha  to  Denver  pays  fifty  mills 
per  ton  per  mile,  and  from  Denver  to  Cheyenne  pays  110  mills 
per  ton  per  mile.  Now  with  all  the  controversies  I  have  had 
with  the  railroads,  I  never  once  contended  for  low  rates.  We  are 
not  seeking  confiscation  of  railroads.    What  we  want  is  fair  play. 

Somebody  I  notice  made  a  remark  in  the  paper  yesterday 
that  if  the  rate  of  President  Eoosevelt,  or  his  suggestions  were 
enforced,  then  New  England  would  be  fit  for  nothing  but  educa- 
tional institutes  and  seaside  resorts.  Well,  if  we  don't  get  it 
changed,  our  State  of  Colorado  will  certainly  only  be  suited  for 
a  one-lun2:  hospital  and  a  globe  trotter's  station. 

I  am  surprised  that  the  Kansas  City  delegation  has  attended 
the  other  meeting.  Evidently  Kansas  City  does  not  know  that 
they  are  not  in  it  when  it  comes  to  shipping  to  the  Orient  or  to 
Sidney,  Australia.  Only  a  week  ago  I  had  a  case  in  point  wliere 
machinery  manufactured  in  Colorado  was  shipped  to  Sidney 
and  they  charged  us  $3.50  a  himdred.  first  class;  whereas,  in 
order  to  get  the  lower  rate  they  had  to  ship  back  to  Chicago, 
then  through  Denver  again,  and  over  to  Sidney,  and  they  got 
$1.75  rate.  The  same  thing  prevails  at  Kansas  City.  I  see  our 
Chairman,  Mr.  Cowan,  here.  He  has  offered  to  debate  this 
question  with  any  of  the  men  on  the  other  side.  I  shall  be  glad 
to  second  our  attorney  l)y  giving  him  such  figures  that  I  know 
we  will  knock  out  any  half  dozen  they  can  offer  on  the  other  side. 
The  fact  is  today  if  Kansas  City  wanted  to  ship  a  hundred  cars 
of  machinery  to  Sidney,  Australia,  they  would  have  to  pay  $2.60 
to  the  Pacific  Coast  and  50  cents  on  board  ship,  $3.10.  They 
would  do  better  l)y  sliipping  it  Ijack  to  Chicago,  and  then  on 
through  Kansas  City  again,  on  its  way  to  Sidney,  and  get  $1.75 
rate.  I  ask  any  sane  man,  is  there  any  logic  or  sense  in  such  a 
rate?  Mr.  Biddle,  formerly  of  the  Santa  Fe,  now  of  the  Chi- 
cago and  Eock  Island,  was  asked  l)y  me  what  did  constitute  a 


65 

reasonable  rate.  He  said :  "A  reasonable  rate  is  a  rate  for  a 
reason."  Mr.  McKinley  is  on  record  as  having  answered  Judge 
Prouty,  of  the  Interstate  Commerce  Commission,  at  that  same 
hearing,  that  rates  are  made  by  instinct.  He  wanted  to  know 
what  line  of  thought  he  would  have  to  adopt  to  get  on  to  the 
instinct. 

Now  I  recommend  to  you,  gentlemen,  to  read  McClure's. 
That  article  is  very  conservative.  He  should  have  put  in  a 
whole  lot  more. 

We  all  know  about  the  shorter  haul  within  the  long  one. 
That  is  the  fundamental  part  of  the  Interstate  Commerce  law. 
A  short  haul  within  a  longer  one  should  never  be  charged  more 
than  the  long  haul.  In  our  state,  from  Trinidad,  where  Mr. 
MacKenzie  comes  from,  if  he  wants  to  ship  to  Cheyenne  he  pays 
seven  cents  per  ton  per  mile;  if  he  wants  to  ship  on  to  Kimball, 
which  is  a  longer  haul,  he  gets  a  lower  rate.  This  is  the  kind 
of  thing  that  we  encounter. 

Another  one  is  that  the  raw  material  in  many  cases  is  charged 
higher  than  the  manufactured  goods.  The  Brown  Palace  Hotel 
at  Denver  was  supplied  with  mattresses  in  the  east,  and  I  was 
at  a  disadvantage  by  having  to  pay  $670  more  freight  for  the 
raw  hair  than  the  hair  mattresses  were  shipped  in  for.  Of 
course  I  wasn't  in  it.  That  is  only  one  of  the  many  cases  I  could 
give  you. 

Now  they  say  we  should  not  ask  for  more  power  for  the  com- 
mission. Thirteen  months  have  elapsed  since  the  hearing  of  this 
case  of  ours  on  cotton  piece  goods,  and  we  have  not  got  a  ruling 
by  the  Commission.  Now  I  want  to  have  that  Commission  get 
power  to  say  if  the  $2.24  rate  is  right,  and  if  not,  what  is  right; 
if  the  railroad  can  carry  the  goods  through  to  the  Pacific  coast 
for  ninety  cents,  what  would  be  fair  to  drop  it  off  at  Denver? 
We  are  on  the  route,  that  is  the  point. 

I  have  taken  up  already  too  much  of  your  time.  I  thank 
you,  gentlemen." 

The  Chairman  :  ''The  Committee  on  Kesolutions  is  ready 
to  report."' 

Mr.  E.  p.  Waldron  :  "Mr.  Chairman,  I  wish  to  move  that  all 
informal  discussions  on  motions  or  resolutions  be  confined  to 
five  minutes,  and  all  speeches  or  addresses  by  invitation  be  lim- 
ited to  twenty  minutes." 

The  motion  was  seconded. 

The  question  was  called  for,  and  the  Chair  having  put  the 
motion,  the  same  prevailed. 


66 

The  Chairman:  "The  report  of  the  Committee  on  Eesolu- 
tions." 

Mr.  J.  H.  Call  :  "Mr.  Chairman  and  Gentlemen  of  the  Con- 
vention, on  behalf  of  the  Committee  on  Eesolutions,  I  have  the 
honor  to  submit  the  following  report :" 

The  Committee  on  Eesolutions  of  the  Interstate  Commerce 
Law  Convention  held  at  Chicago  October  26  and  27,  1905,  have 
the  honor  to  report  as  follows : 

"Resolved,  First:  We,  the  delegates  assembled  in  Chi- 
cago, under  a  call  issued  to  those  commercial,  producing  and 
manufacturing  organizations  that  sustain  the  President  of  the 
United  States  in  his  publicly  expressed  views  as  to  Interstate 
Commerce  Law  Amendment,  congratulate  the  country  that 
Theodore  Eoosevelt,  as  President  of  the  United  States,  has 
show^n  his  wisdom  and  patriotism  in  recommending  to  Congress 
constitutional,  effective  and  just  measures  for  the  regulation  of 
Interstate  Commerce  that  shall  provide  for  the  people  a  national 
tribunal  with  power  to  substitute  a  reasonable  and  just  rate  or 
classification  for  one  proven  to  be  unreasonable  and  unjust,  and 
yet,  that  shall  preserve  to  the  railroads  just  and  reasonable  con- 
trol over  their  properties  and  revenues. 

We  also  commend  the  House  of  Eepresentatives  for  having 
shown  a  spirit  of  earnest  co-operation  with  the  President  in  his- 
efforts  to  thus  remedy  existing  transportation  evils. 

Second:  We  specifically  agree  with  the  President  that  the 
only  constitutional  and  effective  method  for  the  supervision  of 
rates,  classifications  and  practices  is  by  amending  the  Interstate 
Commerce  Act  so  as  to  provide  that:  « The  Interstate  Com- 
merce Commission  should  be  vested  with  the  power,  where  a 
given  rate  has  been  challenged  and  after  fall  hearing  found  to 
be  unreasonable,  to  decide,  subject  to  judicial  review,  what  shall 
be  a  reasonable  rate  to  take  its  place;  the  ruling  ot  the  Com- 
mission to  take  effect  immediately  and  to  obtain  unless  and 
until  it  is  reversed  by  the  court  of  review.' 

Third:  The  Amendment  of  the  Interstate  Commerce  Act 
should  be  sufficiently  broad  to  cover  all  interstate  transportation 
service,  including  all  charges,  regulations  and  exactions  in  con- 
nection therewith,  whether  for  facilities  provided  by  railroads 
themselves  or  through  arrangements  with  others.  (Signed  by 
the  committee.)" 

"Gentlemen  of  the  Convention:  I  read  in  the  constitution 
of  the  United  States  that  the  supreme  and  absolute  power  to 


67 

control  interstate  transportation  has  been  vested  in  the  Con- 
gress of  the  United  States.  I  read  in  the  decisions  of  our  Su- 
preme Court,  running  through  a  period  of  half  a  century,  that 
the  regulation  of  conimerce  includes  as  one  of  its  chief  factors 
and  functions  the  control  of  rates  for  transportation.  1  read  in 
the  reports  of  bureaus  and  departments  of  this  Government  in 
testimony  compiled  and  taken  before  committees  of  the  Senate 
and  of  the  House,  that  the  actual  control  of  Interstate  Commerce 
is  not  in  the  hands  of  Congress  today ;  that  it  is  not  in  the  hands 
of  any  bureau,  department  or  officer  of  the  United  States;  that 
two-thirds  of  the  mileage  of  the  railways  of  the  United  States 
is  in  the  immediate  control  of  half  a  dozen  corporations,  and  that 
the  whole  of  it  is  in  their  indirect  control ;  that  these  half  dozen 
corporations  are  manipulated  and  controlled  by  less  than  a  dozen 
men;  that  these  less  than  twelve  men  today  control  the  vast 
power  to  regulate  the  commerce  of  the  United  States,  which  was 
conferred  upon  Congress  by  the  makers  of  the  constitution.  A 
political  power,  a  Governmental  power,  that  never  was  intended 
to  be  vested  in  individuals  or  private  corporations.  What  we 
demand  is  that  that  power  to  regulate  commerce,  that  political 
power  shall  be  resumed  by  the  Government  of  the  United  States 
and  restored  to  the  Government  for  the  protection  of  its  people. 
It  is  a  remarkable  coincidence  that  these  dozen  men  who 
manipulate  and  control  the  commerce  of  the  United  States  have 
names  which  are  familiar  to  other  organizations.  Those  same 
names  we  read  in  connection  with  the  infamy  perpetrated 
through  life  insurance  companies  of  this  country.  Those  same 
names  appear  in  the  directory  and  among  the  officers  of  the  great 
trusts  of  this  country.  That  is  not  a  coincidence,  gentlemen, 
but  it  is  a  fact  that  the  same  persons  control  all  those  instru- 
mentalities, and  they  all  liave  been  built  up  through  the  same 
methods  of  manipulation.  These  gentlemen  are  not  to  be  dis- 
parage'd  by  me.  I  am  not  here  to  say  aught  against  them  in 
their  personal  characteristics  or  traits.  They  are  industrious 
men,  and  they  are  said  to  be  good  men ;  part  of  the  time  which 
they  have  at  their  command  they  spend  in  Sunday  schools  pray- 
ing to  God  to  make  them  good.  A  part  of  the  time  they  spend 
in  playing  golf;  and  part  of  the  time  they  spend  in  es- 
tablishing libraries  and  other  institutions  where  their  names 
will  be  engraved  in  enduring  granite  to  hand  down  to  posterity. 
But  the  greater  part  of  the  time  of  these  gentlemen,  I  undertake 
to  say,  is  spent  in  devising  new  ways  and  methods  for  increasing 
the  cost  of  necessaries  of  life  in  the  United  States ;  to  increase 
the  cost  of  food  and  of  clothing,  of  transportation,  and  thereby 
of  food,  of  products,  and  to  make  it  harder  for  the  vast  popula- 
tion of  poverty  stricken  people  in  the  cities  of  this  country  to 
eke  out  an  existence.  No  man  can  say  what  has  been  the  in- 
-crease  in  the  death  rate  in  the  cities  of  the  United  States  by 


68 

reason  of  the  inc-rease  in  the  cost  of  fuel,  of  clothing,  of  food, 
and  of  necessaries,  which  has  been  brought  about  by  the  manipu- 
lation of  these  trusts  and  organizations  which  owe  their  exist- 
ence solely  to  the  manipulation  of  railroad  rates. 

Gentlemen  of  the  convention,  the  first  great  act  intended  to 
regulate  interstate  commerce  Avas  passed  by  Congress  in  1887. 
It  was  amended  in  the  two  years  following,  and  that  act  as  thus 
amended  provided  in  its  essential  features  that  all  rates  for 
transportation  should  be  just  and  reasonable.  The  Interstate 
Commerce  Commission,  composed  of  five  men,  was  created  to 
administer  that  act,  and  the  Commission  was  specifically  empow- 
ered to  endorse  all  of  the  provisions  of  that  act.  The  Commis- 
sion supposed  and  the  country  supposed  that  the  power  to  endorse 
all  the  provisions  of  that  act  included  the  power  to  prevent  un- 
reasonable and  excessive  charges  prohibited  by  that  act,  and  they 
acted  upon  that  theory  for  more  than  nine  years.  Hundreds  of 
cases  decided  by  them,  in  which  they  controlled  rates,  have  been 
certified  to  and  dealt  with  by  the  Senate  Committee  on  Inter- 
state Commerce,  as  illustrating  the  power  which  the  Commission 
assumed  and  exercised  for  more  than  nine  years,  without  ques- 
tion from  any  part  of  the  country. 

In  March,  1896,  the  Cincinnati  railway  case  came  before  the 
Supreme  Court  of  the  United  States,  involving  directly  or  indi- 
rectly the  question  of  the  power  of  the  Commission  to  "fix  rates ; 
and  there  for  the  first  time,  in  March,  1896,  the  Supreme  Court 
of  the  United  States  said  that  they  did  not  find  in  the  Interstate 
Commerce  Act  any  provision  empowering  the  Interstate  Com- 
merce Commission,  directly  or  indirectly,  to  fix  a  rate  for  trans- 
portation. 

At  the  next  session  of  the  Supreme  Court  another  case  came 
before  them  involving  the  power  of  the  Commission  to  prescribe 
a  maximum  rate  where  the  existing  rate  was  found  to  be  im- 
reasonable,  and  the  court  there  assumed  that  it  had  already  de- 
cided in  j\Iarch,  1896,  in  162  U.  S.  Eeports,  that  the  Commis- 
sion had  no  such  authority  or  power.  I  much  prefer  to  read  the 
dissenting  opinion  of  Judge  Harlan  in  that  case,  as  showing  the 
sound  law  governing  that  subject,  and  the  proper  construction 
of  law,  than  the  opinion  of  the  majority  of  that  court.  I  am  not 
here  to  say  that  any  decision  of  the  Supreme  Court  of  the  United 
States,  once  rendered,  wl^ether  by  a  divided  or  bv  a  whole  court, 
is  not  the  law  of  the  land.  It  is  the  law,  whatever  that  decision 
may  l)e,  and  T  am  not  here  to  dispute  it. 

But  a  decision  of  the  Supreme  Court  of  the  United  States 
performs  two  offices.  It  is  a  decision  upon  the  rights  of  the  par- 
ties involved  in  that  particular  case.  It  is  an  authoritv  in  other 
litigation  only  so  far  as  it  is  well  founded  in  law  and  reason.  And 
I  prefer  as  a  precedent  and  as  an  authority  the  dissentina-  opinion 
of  Justice  Harlan  to  that  of  the  majority  of  the  court.     But  be 


69 

tliat  as  it  may,  the  court  has  dechired  that  the  Commission  does 
not  have  the  power  to  prescribe  maximum  rates,  although  the 
court  said  in  those  various  cases  that  if  Congress  had  conferred 
that  power  upon  the  Interstate  Commerce  Commission,  it  would 
have  been  a  constitutional  exercise  of  power  by  Congress.  And 
the  court  cited  numerous  decisions  of  that  court  and  of 
other  courts,  showing  that  it  had  been  well  established  and 
thoroughly  sustained  as  constitutional  law,  that  the  power 
to  supervise  railway  rates,  and  the  power  to  determine  in  par- 
ticular cases  the  maximum  rates  was  a  lawful  exercise  of  power 
which  could  be  delegated  to  a  commission  or  an  administrative 
body.  The  court  claimed  and  decided  solely  that  Congress  had 
not  specifically  given  that  power  to  the  Interstate  Commerce 
Commission.  What  we  now  ask  is  that  that  power  be  restored 
to  the  Interstate  Commerce  Commission,  which  the  whole  coun- 
try supposed  for  nearly  ten  years  that  it  possessed,  and  which  it 
actually  exercised  to  the  greatest  benefit  of  the  entire  country, 
and  without  question  from  the  railway  interests. 

A  most  remarkable  result  in  my  opinion  followed  from  that 
decision  of  the  Supreme  Court.  I  think  that  no  decision  since 
the  Dred  Scott  case  has  had  a  greater  influence  upon  the  affairs 
of  this  country  than  those  decisions  of  the  Supreme  Court  which 
I  have  just  referred  to.  It  has  long  been  and  still  is  a  cardinal 
principle  in  the  interpretation  of  laws  and  the  construction  of 
statutes,  that  corporate  powers,  powers  claimed  by  corporations 
against  the  sovereignty,  against  the  state,  and  against  the  na- 
tion, were  to  be  strictly  construed,  and  in  case  of  ambiguity  or 
doubt  that  all  such  power  should  be  withheld  and  the  construc- 
tion should  be  favorable  to  the  nation  or  to  the  state. 

Now  consider  for  a  moment  what  the  question  was  before  the 
Supreme  Court  in  those  cases.  The  Interstate  Commerce  Com- 
mission, a  great  administrative  body  of  the  United  States, 
claimed  power  to  control  railway  rates.  To  deny  to  them  that 
power  operated  immediately  and  by  indirection  to  confer  that 
power  iTpon  the  railways,  a  power  which  was  not  given  by  the 
Interstate  Commerce  Act.  You  will  read  the  Interstate  Com- 
merce Act  in  vain  to  find  any  provision  in  that  Act  specifically 
empowering  a  railway  company  to  fix  and  determine  a  tariff 
of  railway  rates.  Yet  the  effect  of  the  decision  was  to  take 
what  you  took  away  from  the  one  and  confer  it  upon  the  other, 
and  thereby  the  court,  by  indirection,  conferred  that  power  upon 
the  railways,  where  it  has  since  been  vested,  and  has  ever  since 
been  exercised.  I  am  not  criticising  the  court  for  the  effect  of 
that  decision,  because  it  was  a  necessary  result  of  what  they  de- 
cided as  a  matter  of  law.  And  Congress  has  had  ten  years  in 
which  to  correct  the  wrong  and  to  remedy  the  evil,  but  has  not 
done  so. 


70 

In  the  year  1896  the  railways  of  the  country  were  not  in  an 
unprosperous  condition.  In  the  following  liscal  year  ending 
June  30,  1897,  the  net  income  of  all  the  railways  of  the  United 
States  averaged  per  mile  of  road  $2,700.  In  the  seven  years 
succeeding  the  decision  of  the  Supreme  Court  denying  govern- 
mental supervision  over  rates,  the  net  income  of  the  railways  of 
the  United  States  had  increased  on  an  average  to  $4,137  per 
mile.  That  was  the  immediate  effect  of  denying  public  con- 
trol over  interstate  commerce  to  the  Interstate  Commerce 
Commission.  It  enabled  the  railroads  to  combine  and -to  fix 
any  rates  they  wanted  to  fix.  I  would  like  to  impress  upon 
you,  gentlemen  of  the  convention,  that  there  does  not  exist  in 
the  United  States  today  any  power  in  the  law  to  restrict  a  rail- 
road rate.  There  is  an  erroneous  impression  that  the  Interstate 
Commerce  Commission  may  by  some  indirect  method  reduce  a 
railroad  rate.  I  want  to  state  to  you  that  there  is  no  such  power 
in  the  law.  No  difference  what  a  railroad  rate  may  be,  it  can- 
not be  reduced  by  the  Interstate  Commerce  Commission.  It 
cannot  be  reduced  by  the  Commission,  and  by  the  courts  to- 
gether; nor  can  it  be  reduced  by  any  other  authority  in  this 
Government.  That  power  is  absolutely  vested  in  the  railways 
today,  and  the  only  recourse  which  the  people  of  this  country 
have  is  to  recover  excessive  charges. 

The  Fifth  Amendment  to  the  Constitution  of  the  United 
States,  which  provides  that  no  person  shall  be  deprived  of  life, 
liberty  or  property  without  due  process  of  law  or  without  com- 
pensation, applies  to  the  Government  of  the  United  States,  and 
to  all  its  instrumentalities;  including  railways  exercising  fran- 
chises of  power  under  the  United  States.  The  provision  of  the 
Fifth  Amendment  was  taken  bodily  from  the  Great  Charter  of 
King  John,  and  it  had  been  in  existence  in  this  country  for  three 
quarters  of  a  century  before  the  Fourteenth  Amendment  was 
ever  passed.  The  Fourteenth  Amendment  to  the  Constitution 
of  tlie  United  States  applied  to  the  states,  and  it  prohibited  the 
states  from  denying  to  any  person  life,  liberty  and  property 
without  due  process  of  law.  I  rely  upon  the  Fifth  Amendment 
to  the  Constitution  of  the  United  States  for  the  protection  of 
my  clients  from  excessive  overcharges  by  railway  companies.  I 
know  that  they  have  no  other  remedy  and  no  other  right  under 
the  laws  today  but  that  contained  in  the  charter  of  liberties  of 
the  English  people.  It  has  been  a  favorite  pastime  of  the  rail- 
ways in  this  country  for  twenty  years  to  go  before  the  courts  of 
the  United  States  under  the  Fourteenth  Amendment  and  to  say 
that  the  states  through  their  Boards  of  Commissioners  have  de- 
prived the  railroads  of  their  property  without  due  process  of 
law,  because  through  those  Commissioners  rates  have  been  fixed 
that  did  not  yield  the  railways  profitable  returns  upon  their  in- 
vestments ;  and  the  courts  have  uniformlv  held  that  wherever 


71 

rates  have  been  fixed  too  low  to  give  a  return  upon  railway  prop- 
erty of  profits,  that  such  a  rate  is  a  denial  of  property  without 
due  process  of  law,  in  violation  of  the  Fourteenth  Amendment. 
But  how  about  the  Fifth  Amendment  to  the  Constitution  of 
the  United  States,  that  operates  upon  the  United  States  and  its 
agencies?  It  is  under  that  provision  of  the  Constitution  that 
the  people  of  this  country  will  obtain  their  sole  protection,  un- 
less and  until  they  can  secure  through  Congress  a  law  which  re- 
stores to  the  United  States  the  regulation  of  commerce." 

The  Chairman:  ^'Gentlemen  of  the  Convention:  The 
Committee  on  Finance  is  requested  to  meet  at  once  in  one  of 
the  rooms  in  front  here,  as  they  probably  will  have  work  to  do 
immediately  before  the  Convention  adjourns." 

Hon.  S.  E.  Van  Sant:  "Mr.  Chairman,  I  desire  to  second 
the  motion  for  the  adoption  of  the  resolutions  just  read.  We 
have  come  to  the  parting  of  the  ways.  We  stand  here  for  the 
principle,  deep  rooted  and  firmly  settled  in  the  hearts  of  the 
American  people.  There  must  be  a  separation  of  the  sheep  and 
the  goats.  We  claim  to  be  the  sheep.  The  goats  have  held  a 
convention  in  another  hall.  What  is  the  main  object  of  the  goat 
in  life?  It  is  to  buck,  and  they  are  bucking  the  President  of 
the  United  States  and  the  American  people.  These  resolutions 
are  terse  and  to  the  point.  They  are  our  platform,  and  we 
stand  upon  it  and  proclaim  it  to  the  world,  and  we  will  fight 
it  out  on  this  line.     I  am  glad  they  are  so  short,  and  so  brief. 

I  see  another  good  evidence  in  this  meeting.  I  come  from 
the  North  Star  State,  and  I  am  glad  to  meet  men  from  the 
Lone  Star  State  of  Texas.  Minnesota  and  Texas  can  shake 
hands  on  this  proposition,  and  it  means  something  when  an  old 
confederate  soldier  and  lifelong  Democrat  can  stand  upon  this 
platform  and  say  he  stands  with  the  President  of  the  United 
States  for  rate  regulation.  It  means  something  when  men  will 
come  here  clear  from  Florida  and  Georgia  and  other  states  in 
the  south  and  join  with  us.  It  means  to  me  a  new  union,  a  new 
proposition,  a  new  platform,  wide  enough  for  every  man  in 
America,  north  or  south,  to  stand  upon.  And  let  us  go  from 
this  meeting  resolved  that  we  will  not  only  pass  resolutions,  but 
that  we  will  earnestly  labor  for  what  we  believe  in.  This  is  a 
fighting  age.  The  greatest  age  and  the  greatest  era  the  world 
has  ever  known,  and  if  you  want  a  thing  you  must  not  only  ask 
for  it,  but  you  must  fight  for  it,  and  fight  hard  till  you  get  it. 
We  know  what  we  want,  and  we  are  here  for  that  purpose.  Do 
not  be  deceived  and  think  that  this  will  be  an  easy  fight.  It  will 
not.  Not  less  a  person  than  a  traffic  manager  told  me  last  night 
that  it  was  their  purpose  to  organize  every  voting  precinct  in  this 
country  as  business  men  to  oppose  this  wild  scheme  of  ours,  to 


72 

give  to  a  certain  commission  selected  by  Congress,  power  to  make 
a  rate  that  is  reasonable.  We  are  ready  for  the  fight.  Let  us 
buckle  on  our  armor  and  enter  the  contest  like  men,  and  not  be 
dismayed  because  the  odds  are  great.  Eemember  this,  gentlemen, 
that  the  greatest  victory  comes  after  the  hardest  fighting;  that 
everything  we  have  won  in  America  has  been  under  hard  condi- 
tions.    It  makes  us  to  be  men." 

Mr.  J.  S.  Dougherty  :  "I  wish  to  offer  an  amendment  to  the 
resolution,  that  we  insert  before  the  word  'rate'  the  word  'maxi- 
mum.' Gentlemen,  when  you  take  into  consideration  the  ques- 
tion of  thirteen  billions  of  dollars  that  are  to  be  affected  by — " 

The  Chairman  :  "The  gentleman  is  out  of  order.  There  is 
no  motion  before  the  House.  The  Chair  heard  no  motion  to 
adopt  the  report  of  the  Committee  on  Eesolutions." 

A  Delegate  :  "I  move  that  the  report  be  adopted." 

The  Chairman  :  "You  can  speak  to  the  motion,  Mr.  Dough- 
erty, to  adopt  the  report  of  the  Committee  on  Eesolutions." 

Mr.  Dougherty  :  "As  I  have  stated,  we  want  to  place  our- 
selves in  the  strongest  possible  position  to  make  this  fight.  A 
maximum  rate,  as  has  been  stated  by  Judge  Call,  is  constitution- 
al, provided  the  bill  enacted  by  Congress  grants  to  the  Commis- 
sion that  power.  The  President  of  the  United  States  does  not 
do  things  by  indirection.  He  comes  squarely  to  the  front.  Now, 
gentlemen,  the  United  States  Government  has  expended  at  Gal- 
veston about  $8,000,000  in  deepening  a  harbor  there.  Prior  to 
the  time  of  that  work  the  rate  on  grain  from  Kansas  City  to 
Galveston  was  45  cents  a  hundred  pounds.  Today  the  export 
rate  on  grain  from  Kansas  City  to  Galveston  is  18  cents  a  hun- 
dred pounds." 

There  is  one  feature  of  the  question  that  has  not  been  pre- 
sented to  this  Convention.  We  as  American  citizens  have  got 
to  meet  in  foreign  markets  the  products  of  other  sections  of  the 
globe.  The  American  wheat  grower  has  to  meet  in  European 
markets  the  wheat  growers  of  Eussia,  of  India,  of  the  Argentine. 
If  by  deepening  our  channels  and  increasing  our  transportation 
facilities  the  wheat  growers  of  that  vast  section  of  our  country 
lying  west  of  the  Mississipp  river  are  able  to  export  their  grain 
and  sell  it  in  foreign  markets,  then  that  leaves  to  the  markets  or 
to  the  farmers  east  of  the  Mississippi  Eiver,  Chicago,  Cleveland, 
Buffalo,  New  York,  Boston,  as  their  markets.  But  suppose  we 
could  not  do  this.  Then,  gentlemen,  the  grain  west  of  the 
Mississippi  river  would  have  to  be  diimped  onto  this  market, 
damaging  every  industry  in  the  country." 


73 

Judge  S.  H.  Cowan  :  "Mr.  Chairman,  Gentlemen  of  the  Con- 
vention :  I  have  avoided  in  every  possible  way  consuming  your 
time.  I  love  to  speak  myself  sometimes,  but  I  have  been  too 
tired  and  have  had  too  many  other  things  to  do.  Mr.  Dough- 
erty, in  my  judgment,  misapprehends  the  significance  of  the 
resolution.  This  resolution  only  provides  for  the  establishment 
of  a  just  rate,  one  that  is  lawful,  one  that  is  correct,  and  that 
must  be  left  to  the  judg-ment  of  somebody.  We  think  it  cannot 
be  left  to  the  judgment  of  those  who  get  the  money.  It  would 
not  be  fair  to  leave  it  to  the  judgment  of  the  man  who  pays 
the  money.  Hence  it  must  be  left  to  the  judgment  of  some  trib- 
unal which  can  fairly  arbitrate  it  between  the  man  who  gets  the 
money  on  the  one  hand,  and  the  man  who  pays  the  money  on 
the  other.     We  can  only  ask  that  that  method  be  provided. 

Now,  with  respect  to  the  maximum  rate  proposition.  I  want 
to  call  the  attention  of  the  convention  to  some  points  wherein 
you  will  see  that  it  will  not  do  for  this  convention  to  undertake 
to  here  provide  a  law  nor  prescribe  the  exact  terms  of  it.  The 
President  has  said  in  his  last  statement,  as  I  understand  it,  at 
Ealeigh,  that  the  Commission  should  be  empowered  to  fix  a  just 
and  reasonable  maxinmm  rate.  Now,  whether  the  President 
said  that  or  not  (I  believe  he  did  say  it — the  newspapers  so  re- 
port) that  is  as  much  as  the  Commission  ought  to  do  where  it 
is  simply  passing  upon  the  reasonableness  of  the  rate  itself  alone. 
But  let  me  put  a  case  before  you  to  illustrate  wherein  the  law 
cannot  be  enforced  simply  by  the  establishment  of  a  maximum 
rate.  The  Interstate  Commerce  Commission  held  that  the  rail- 
roads ought  not  to  charge  a  greater  sum  for  the  transportation 
of  live  stock  than  the  transportation  for  the  products  of  live 
stock,  between  the  Missouri  river  and  Chicago.  The  general 
rule  throughout  the  country  is  that  the  rates  are  higher  on  the 
more  valuable  and  finished  product.  When  the  commission  made 
that  ruling  in  1890,  all  of  the  railroads  complied  with  it  then, 
believing  that  the  Commission  had  the  power  under  the  third 
section  of  the  Act  to  prohibit  undue  preferences  and  undue  dis- 
criminations. 

Now  the  difficulty  lies  in  the  fact  that  the  Commission  can- 
not fix  just  what  the  rate  will  be.  It  may  find  what  it  ought 
to  be,  but  it  cannot  name  it.  It  can  only  say  that  you  shall  not 
charge  the  particular  rate  that  you  are  now  charging,  but  the 
law  does  not  permit  them  to  indulge  the  intelligent  conclusion, 
"But  you  shall  charge  a  rate  that  is  a  proper  one."  Now  sup- 
pose that  there  is  a  just  relation  of  rates  between  the  products 
of  live  stock  and  live  stock ;  and  suppose  this  tribunal  finds  what 
it  ought  to  be.  Now,  if  it  simply  fixed  the  maximum  rate  on 
each,  you  can  readily  see  that  the  roads  would  be  left  perfectly 
free  to  change  that  relation  of  rates  and  yet  not  disobey  the  order 
of  the  Commission. 


74 

Let  me  suppose  another  case.  Take  the  case  of  Wichita, 
Kansas,  and  Omaha,  and  take  a  shipment  from  St.  Louis,  and 
say  the  charge  is  that  the  Missouri  Pacific  railroad  discriminates 
between  those  places  by  charging  a  higher  rate  to  Wichita,  Kan- 
sas (the  shorter  distant  point  from  St.  Louis)  than  to  Omaha, 
Nebraska,  and  the  merchants  at  each  place  are  competing  for 
business  situated  half  way  between  along  the  south  line  of  Ne- 
braska or  the  north  line  of  Kansas.  Now  how  would  it  be 
possible  for  the  Commission  to  fix  a  just  relation  of  rates  that 
would  not  amount  to  a  discrimination,  unless  they  fixed  what 
the  rate  itself  shall  be  in  such  a  case?  It  would  not  suffice  to 
fix  a  maximum  rate,  for  the  roads  could  yet  comply  with  the 
order  of  the  Commission  and  still  keep  up  the  discrimination. 

There  are  many  of  these  difficulties,  gentlemen,  that  confront 
us  when  we  consider  the  subject  practically,  so  many  that  it  is 
impossible  for  this  Convention  to  discuss  them.  Now,  then, 
you  must  leave  to  Congress,  you  must  leave  to  the  powers  who 
can  take  time,  who  can  carefully  consider  it,  to  provide  the  pre- 
cise language  of  the  law.  The  Attorney  General  of  the  United 
States,  on  being  called  upon  by  the  Senate  Committee  to  do  so, 
gave  an  elaborate  opinion  with  respect  to  the  power  of  Congress 
over  the  regulation  of  rates,  and  in  his  opinion  he  limited  it  to 
the  power  to  fix  maximum  rates.  Now  it  may  be  that  that  is  a 
correct  decision.  Presumably  it  is.  That  would  not,  however, 
affect  the  right  of  Congress,  doubtless,  to  fix  the  exact  rate  where 
it  was  necessary  to  do  so  in  order  to  prevent  a  discrimination. 
So  that  it  seems  to  this  committee  which  has  made  this  report, 
to  be  wise  for  this  Convention  to  simply  adopt  the  general  prin- 
ciple announced  by  the  President  that  Congress  should  provide 
the  method  of  fixing  just,  fair  and  equitable  rates,  and  leave  the 
precise  language  or  method  of  it  to  Congress  to  provide;  because 
you  cannot  yourselves  now  prepare  a  bill  and  present  it. 
We  believe  that  the  action  of  this  committee  ought  to  be  adopted, 
so  that  it  will  go  before  the  country  that  you  have  exactly  en- 
dorsed those  general  expressions  of  the  President,  and  stand 
ready  to  help  him  carry  it  out.  and  your  Executive  Committee 
can  aid  in  working  out  the  detail  of  the  precise  lansfuage  of  the 
law." 

Mr.  W.  I.  Chamberlain  :  "Mr.  Chairman,  it  is  reported,  and 
I  have  seen  evidence,  that  the  President  is  to  be  wired  by  the 
other  convention  that  the  people  of  this  country  do  not  want  the 
powers  of  the  Interstate  Commerce  Commission  enlarged,  as  we 
are  trying  to  do.  I  am  here  as  the  Master  of  the  Ohio  State 
Grange,  with  a  membership  of  forty  thousand,  to  assure 
you,  sir,  and  this  Convention,  that  our  membership  is. a  unit  in 
its  demand  and  desire  to  stand  by  the  President.  Not  only  that, 
sir,  but  I  believe  that  everv  farmer  in  Ohio  stands  with  the 


75 

Grange  on  that.  I  am  also  a  member  of  the  Executive  Com- 
mittee of  the  National  Grange,  and  we  meet  in  Atlantic  City, 
New  Jersey,  next  month,  and  the  first  resolution,  I  believe, 
that  will  be  introduced  in  that  body  will  be  a  resolution  endors- 
ing the  President  in  this  same  great  fight  he  is  making. 
And  every  State  Grange  in  this  Union  will  within  two  months 
hold  its  annual  session,  and  that  will  be  the  first  resolution 
adopted,  to  stand  by  the  President  in  the  demand  that  this  Com- 
mission have  power  to  fix  rates  where  it  is  found  necessary. 

Gentlemen,  this  National  Grange  was  in  at  the  birth  of  this 
Interstate  Commerce  Commission.  It  has  supported  it  ever 
since,  and  we  with  the  President  are  demanding  today  that  the 
tillers  of  the  soil  from  ocean  to  ocean  have  some  reasonable  rate 
fixed  so  that  we  may  put  our  produce  into  the  hands  of  the  con- 
sumer at  some  rate  that  will  leave  to  us  a  fair  share  of  what  the 
harvest  gives.     I  thank  you." 

Mr.  G.  a.  Whitewoeth  :  "Mr.  Chairman,  it  is  no  doubt  the 
sense  of  this  Convention  that  we  do  not  want  to  throttle  free 
speech.  It  is  also  the  sense  of  this  Convention  that  the  subject 
matter  as  set  forth  in  the  report  presented  by  the  Committee  on 
Eesolutions  is  to  our  mind  exactly.  Now,  Mr.  Chairman,  there 
are  other  matters  to  come  before  the  Convention  which  need  at- 
tention, and,  sir,  believing  that  we  do  not  need  any  further 
speeches  or  light  upon  the  question  with  which  we  are  familiar, 
and  which  has  been  so  well  presented  here  by  the  Committee  on 
Resolutions  and  by  Governor  Van  Sant,  I  move,  sir,  now  that 
we  have  the  previous  question." 

Cries  of  "Oh,  no." 

Mr.  K.  Z.  Teal  :  "I  want  to  say  a  few  words,  gentlemen.  I 
believe  one  or  two  Texans  have  already  spoken,  but  Texas  is  big 
enough  to  have  two  or  three  men  talk.  I  want  to  reply  in  a  few 
words  to  the  Governor  in  his  beautiful  remarks  just  made.  I 
come  from  the  greatest  Democratic  state  of  the  Union,  and  I 
come  from  a  state  that  loves  the  President  of  the  United  States 
today,  and  I  say,  like  Mark  Antony  said  at  the  grave  of  Caesar, 
'If  I  had  the  language  of  a  Brutus  I  could  move  you  to  mutiny.' 
I  say  to  you,  gentlemen  of  this  Convention,  that  Texas  stands 
ready  and  willing  to  march  with  you  in  this  conflict.  And  I 
dare  say  to  you  today  that  there  is  not  a  Congressman  in  the  state 
of  Texas  who  can  raise  his  voice  against  the  President  in  this 
mighty  move.  If  he  ■  does,  he  will  wither  at  the  next  election 
like  an  aspen  leaf  in  a  sirocco.  I  desire  to  say  to  the  Gov- 
ernor that  I  want  to  tell  him  and  this  Convention  that  the  two 
Senators  of  Texas  stand  side  by  side  with  the  President  of  the 
United  States.     We  voted  against  you,  but  we  are  now  with  you 


76 

on  greater  issues  than  we  ever  had  before.  See  to  it,  Governor, 
that  your  Senators  go  there  like  ours  go.  See  to  it,  you  men  of 
the  northwest,  who  made  him  President,  that  they  stand  with 
us.  Stand  for  him.  That  is  what  we  will  do.  And,  gentle- 
men, if  you  ever  put  him  up  again,  I  think  with  his  present 
ideas  and  his  principles  carried  out,  you  will  find  Texas  throw- 
ing off  the  colors  of  Democracy." 

Mr.  James  T.  Hoile:  "Mr.  Chairman,  at  great  expense 
to  myself,  I  took  a  train  at  Oyster  Bay,  represented  by  the 
President  of  the  United  States,  to  come  here.  I  represent 
the  Manufacturers'  Association  of  New  York,  and  my  name 
is  James  T.  Hoile — with  a  large  H.  I  want  to  give  testi- 
mony here,  gentlemen.  On  the  Southern  Pacific  not  long  ago, 
a  native  of  the  state  we  were  riding  through  said :  'There 
are  only  three  things  you  can  raise  here.  Hell,  an  umbrella 
and  a  windmill.'  I  want  to  testify  that  they  raise  potatoes  down 
there.    We  have  got  the  evidence. 

Now  I  want  to  remove  from  the  minds  of  some  of  the  mem- 
bers of  this  Convention  the  possibility  of  error.  There  is  an  er- 
ror in  connection  with  the  Convention  that  is  being  held  opposite. 
One  of  the  gentlemen  who  is  prominent  in  connection  with  the 
Convention  (I  am  personally  acquainted  with  him),  in  fact, 
several  of  them  are  of  national  reputation,  and  they  have  con- 
nection and  association  with  other  large  bodies,  as  large  as,  or 
perhaps  larger  than  this.  But  I  want  to  say  without  fear  of 
contradiction  that  those  gentlemen  do  not  represent  in  their  ca- 
pacities in  connection  with  this  institution  across  the  street,  the 
organizations  with  which  they  are  personally  connected.  But 
they  do  represent  a  certain  railroad  company.  That  railroad 
company  is  being  represented  today,  and  represented  heroically 
by  its  Vice-President.  The  National  Manufacturers'  Association 
with  Avhich  he  is  connected  is  not  being  represented  by  him. 
It  is  out  of  order  to  become  personal.  It  is  not  my  good 
fortune  to  be  an  Irishman,  but  there  is  a  great  temptation 
here  to  make  a  stab  at  it.  My  doctor  has  advised  me  to  avoid 
excitement  now.  But  I  want  to  say  to  you,  gentlemen,  which 
you  know  to  be  a  fact,  that  so  far  as  the  people  of  these  United 
States  are  concerned,  they  are  a  unit  for  Theodore  Eoosevelt, 
and  you  can't  get  them  away  from  it.  I  want  to  say  to  you 
furthermore  that  the  members  of  Congress  have  had  their  ears 
to  the  ground,  and  they  have  listened  to  the  people,  and  what- 
ever may  have  been  their  motives,  they  have  voted  as  the  people 
directed  them  to  vote.  But  the  monkey  up  the  tree  that  you  are 
after  is  your  Senator.  If  we  want  to  be  practical  let  us  go  back  to 
our  states  and  let  the  legislatures  of  our  states  tell  the  United 
States  Senators  the  goods  that  they  must  deliver,  or  get  down 
and  out.     We  have  taken  the  lid  off  the  insurance  question  by 


77 

vote  of  the  legislature  of  the  State  of  'Rew  York,  and  we  have 
turned  the  picture  of  one  of  our  Senators  to  the  wall. 

Now,  then,  gentlemen,  we  can  go  home  and  tell  our  Sen- 
ators through  our  legislatures  what  we  want  them  to  deliver, 
and  if  they  don't  deliver  they  will  go  down  and  out." 

( At  the  request  of  Col.  Hughes,  Mr.  John  W.  Kern  here  took 
the  chair.) 

Mr.  J.  Farley  :  "I  believe  I  represent  more  votes  than  any 
man  on  this  floor.  I  am  traffic  manager  of  the  Farmers'  Union, 
with  authority  to  act  in  their  matters  anywhere  on  the  earth, 
and  they  have  got  300,000  votes.  It  looks  to  me  as  though  we 
might  as  well  vote.    We  have  a  large  amount  of  business  to  do." 

Mr.  T.  E.  Ballard  :  "I  represent  the  Merchants'  Ex- 
change of  St.  Louis,  Avith  a  membership  of  1,800.  When  the 
President  first  made  his  announcement  in  favor  of  rate  regu- 
lation, the  President  of  our  Association  called  the  Board  to- 
gether, and  we,  I  believe,  were  the  first  organization  to  send  the 
President  a  message  congratulating  him  on  the  stand  he  took. 
Later  the  delegation  from  our  Exchange  called  on  the  President 
and  guaranteed  him  the  support  of  our  organization,  which,  by 
the  way,  is  the  largest  organization  and  the  most  influential  in 
the  Mississippi  Valley.  We  still  stand  for  the  President's  dec- 
laration. We  feel  that  we  must  have  it,  and  we  are  surprised 
to  know  that  there  are  delegates  from  Commercial  organizations 
meeting  with  the  opposition.  We  believe  they  are  misled,  and 
that  eventually  they  will  come  back  home.  We  hope  they  will 
see  the  error  of  their  ways." 

Mr.  C.  S.  Bash  :  "Mr.  President.  Indiana  comes  here 
to  join  heartily  in  this  resolution.  I  have  the  honor  to  be  an 
appointee  from  the  Thirteenth  District,  appointed  by  our  Gov- 
ernor. I  want  to  say  for  Indiana  that  we  never  have  had  a 
Governor  before  so  heartily  in  sympathy  with  the  purpose  of 
this  meeting  as  we  have  at  th,e  present  moment.  I  want  to  say 
also  that  the  flings  at  the  Vice-President  of  this  meeting  have 
been  unjust  and  uncalled  for,  and  they  are  an  insult  to  our  in- 
telligence. Everybody  in  Indiana  knows  Mr.  Kern,  and  they 
know  that  the  assults  that  have  been  made  upon  his  character 
here  are  unjust.  A  gentleman  over  here  a  few  moments  ago 
tried  to  defend  the  rights  of  the  railroad  companies  by  bring- 
ing in  water  navigation  as  an  excuse  for  the  rates  which  haA^e 
been  made  in  favor  of  the  Pacific  coast.  Let  me  call  you 
gentlemen's  attention  to  the  fact  that  the  demurrage  charges  at 
Fall  Eiver,  Massachusetts,  right  at  the  very  verge  of  the  At- 
lantic Ocean,  are  just  exactly  half  what  tley  are  in  Indiana; 
thnt  is,  they  give  just  exactly  double  the  time  for  loading  an! 


78 

unloading  freight  there  that  they  do  in  Indiana.  And  I  have 
been  anxious  ever  since  I  heard  that  statement  to  know  what 
water  navigation  has  to  do  with  that.  I  furthermore  am  ad- 
vised by  the  gentleman  from  Fall  Eiver  that  at  the  end  of  the 
year  they  send  in  their  bill  for  any  charges  that  may  have  been 
made,  and  they  get  a  refund  upon  that. 

The  whole  trouble  with  the  railroad  business  is  that  they  are 
not  fair,  that  they  are  not  impartial,  but  that  they  are  rather 
partial.  Their  entire  regulations  from  one  end  of  this  country 
to  the  other  show  partiality  upon  every  hand.  I  came  here 
loaded  with  so  many  points  on  that  subject  that  I  would  tire  this 
audience  to  death  if  I  attempted  to  relate  them.  I  want  to  say 
that  everybody  here  has  his  heart  full  of  this  subject,  and  it  is 
useless  for  any  one  to  get  up  and  tire  them  with  it.  But  this 
meeting  is  for  the  purpose  of  protecting  the  ordinar3^  everyday 
wage  earner,  laborer,  farmer,  mechanic  and  business  man  in 
this  country.  The  men  who  daily  bring  this  immense  traffic  to 
these  railroad  companies,  and  who  are  so  busy  with  their  o^vm 
work  that  they  cannot  leave  it  to  go  into  court  and  be  badgered 
around  for  one  year,  two  years,  five  years  or  ten  years. 

In  the  year  1900  I  appeared  before  the  Interstate  Com- 
merce Commission  in  this  city.  I  told  them  of  tlie  injustice 
that  was  being  done  by  the  railroad  companies  as  to  the  hay 
rate.  Gentlemen  of  this  Convention,  it  required  five  years 
for  us  to  find  out  that  the  Interstate  Commerce  Commission 
had  the  right  to  only  give  an  opinion  on  the  subject.  The 
railroad  companies  are  still  charging  the  rates  which  they 
put  into  effect  at  that  time,  which  are  unjust  to  the  producers 
and  consumers  of  this  country.  It  should  have  been  corrected 
long  ago,  and  had  the  Interstate  Commerce  Commission  had  the 
power  given  them  at  that  time  it  Avould  have  been  corrected  five 
years  ago.    Gentlemen,  I  thank  you." 

Cries  of  "Question." 

Mb.  Anthony  Ittner:  "Mr.  President  and  Gentlemen 
of  this  Convention :  I  will  not  take  up  the  three  minutes' 
time  that  was  allotted  to  me.  I  will  assure  you  of  that.  But 
you  can  just  see,  Mr.  President,  what  a  great  calamity  it 
would  have  been  had  we  succeeded  in  passing  the  motion  for  the 
previous  question.  We  should  have  missed  some  very  enthusi- 
astic speeches  from  Texas.  What  I  want  to  say  is  this :  I  am 
a  member  of  the  Executive  Council  of  the  Manufacturers'  Asso- 
ciation of  the  city  of  St.  Louis.  I  have  presented  my  credentials 
here  from  Mr.  L.  D.  Kingsland,  the  President  of  the  Associa- 
tion, and  in  those  credentials  I  am  enjoined  to  sustain  and  to 
support  the  policy  advanced  by  the  President  of  the  United 
States.     I  want  to  sav  further.  Mr.  President,  that  if  it  would 


79 

be  convenient  to  have  those  credentials  read  on  this  occasion 
I  would  like  to  have  it  done,  because  my  colleague  has  landed 
in  the  Convention  across  the  way,  and  I  am  satisfied  that  he 
received  a  similar  letter,  testifying  to  his  credentials,  and  his 
right  to  meet  here.  And  it  could  be  proven  by  that  letter  which 
of  us  is  in  the  right  place. 

Mr.  President,  I  never  have  ridden  on  a  railroad  pass.  When 
I  was  a  member  of  Congress  I  refused  a  railroad  pass.  I  am 
not  saying  that  my  colleague  came  up  here  on  a  railroad  pass, 
I  want  that  distinctly  understood,  because  I  have  the  greatest 
admiration  for  the  man,  and  I  would  not  want  to  utter  a  word 
here  that  would  reflect  upon  his  character;  and  that  was  one 
reason  why,  if  it  could  be  done,  I  would  like  to  have  that  letter 
from  Mr.  L.  D.  Kingsland,  President  of  the  St.  Louis  Manu- 
facturers' Association,  entitling  me  to  a  seat  on  the  floor  of  this 
Convention,  read,  so  that  it  could  be  seen  which  of  us  is  in  the 
right  place." 

Mk.  William  B.  Stillwell:  "Mr.  Chairman,  I  represent 
in  this  Convention  four  different  organizations;  the  Inter- 
state organization,  the  Georgia  Saw  Mill  Association,  and  two 
trade  organizations  of  my  city  of  Savannah,  the  Board  of 
Trade  and  the  Chamber  of  Commerce;  also,  sir,  the  National 
Lumber  ]\Ianufacturers'  Association.  And  in  that  connection, 
gentlemen,  let  me  say  that  is  an  industry  that  represents  approxi- 
mately thirty  per  cent  of  the  tonnage  handled  by  the  railroads 
of  the  United  States.  I  have  been  angered  recently  by  hearing 
on  all  hands  that  in  this  movement  we  are  the  enemies  of  the 
railroad.  I  deny  it  I  claim  to  be  a  friend  of  the  railroads.  I 
have  fought  the  railroads  for  years.  I  have  fought  for  them 
at  one  time  and  another  for  years.  I  am  second  only  to  the 
President  of  our  Interstate  Association  in  this  now  nationallv 
Icnown  fight  of  the  two-cent  rate  advance  on  lumber,  one  of  the 
most  interesting  things  that  ever  was  done.  We  now,  gentle- 
men, are  laboring  through  the  long  intricacies  of  the  court,  and 
I  firmly  and  absolutely  believe  that  if  that  is  decided  on  a  strict- 
ly equitable  basis,  we  shall  get  the  judgment  of  the  Supreme 
Court  of  the  United  States,  as  we  already  have  of  the  Interstate 
Commerce  Commission  and  the  Circuit  Court,  and  it  is  now 
pending  in  the  Court  of  Appeals.  What  legal  technicalities 
about  it  there  may  be,  I  am  not  a  lawyer,  and  cannot  tell  you. 

I  was  also  the  instigator  about  two  years  ago  of  one  of  the 
most  just  fights  that  has  ever  been  started  in  the  United  States. 
And  that,  gentlemen,  is  to  do  away  with  a  practice  of  the  rail- 
roads wliich  has  taken  millions  of  dollars  out  of  the  pockets  of 
the  lumber  men.  I  refer  to  the  practice  of  compelling  the  lum- 
iDer  men  to  equip  their  flat  cars  with  stakes.  Two  years  ago  I 
.addressed  a  letter  as  Chairman  of  the    National    Association, 


80 

which  letter  I  had  the  honor  to  have  characterized  by  the  lum- 
bermen as  being  of  the  modern  diplomacy,  polite  but  positive. 
The  day  before  yesterday,  gentlemen,  we  organized  a  fight  on 
that  line  which  will  result,  I  believe,  in  our  victory. 

I  wanted  simply  to  say  further  that  I  am  here  as  I  stated, 
a  friend  to  the  railroad,  for  this  reason.  A  gentleman  has  used 
the  phrase  that  this  movement  is  "commercial  lynch  law."  Gen- 
tlemen, why  should  we  use  that  phrase?  Where  does  lynch  law 
come  from?  From  that  which  is  outrageous  and  iniquitous. 
In  his  innermost  soul  that  man  must  know  that  that  is  tlie  cause 
of  this  movement,  and  that  is  where  the  lynch  law  comes  from. 
The  railroads  have  brought  this  thing  on  themselves.  And  now, 
gentlemen,  while  the  framing  of  the  resolution  was  not  just 
what  it  should  be  in  my  mind,  I  cannot  set  myself  up  against 
this  Convention.  I  am  here  to  carry  out  the  action  of  it,  what- 
ever it  may  be." 

The  Chaikman  :  "The  Chair  recognizes  tlie  distinguished 
gentleman  from  Iowa,  ex-Governor  Larrabee." 

Ex-Governor  Larrabee:  "Mr.  Chairman  and  Gentlemen 
of  the  Convention :  "On  behalf  of  the  Executive  Committee  I  de- 
sire to  congratulate  you  upon  the  fact  that  this  is  the  largest 
Convention  that  we  have  ever  held.  There  are  more  delegates 
present,  and  they  seem  to  be  more  completely  in  unison  as  to 
the  objects  to  be  attained.  Five  years  ago  the  business  organi- 
zations of  the  country  sent  men  to  St.  Louis  and  formed  this 
organization.  They  sent  their  Executive  Committee  to  Wash- 
ington, and  they  have  attended  every  session  of  Congress  from 
that  day  till  this.  For  several  years  our  committee  could  hard- 
ly get  a  hearing  before  Congress.  A  large  majority  of  the 
members  of  both  houses  were  utterly  opposed  to  giving  us  a 
hearing.  The  committees  of  both  the  Senate  and  House  were 
opposed  to  the  measures  advocated  l)y  this  Convention.  Until 
the  meeting  at  St.  Louis  one  year  ago  our  Executive  Committee 
was  disheartened,  almost  inclined  to  give  up.  But  the  enthusi- 
astic support  given  the  committee  at  that  meeting  gave  them 
new  courage,  and  when  Mr.  Bacon  and  his  associates  went  to 
Washington  to  confer  Avith  the  President,  they  found  him  ready 
to  co-operate  witli  tlie  committee.  Tlis  message  in  Dei  •ember 
followed,  and  it  was  like  the  blast  of  the  bugle  of  Roderick  Dhu. 
It  was  equivalent  to  ten  thousand  men  at  least.  You  know 
the  history  of  the  hearings  before  the  Senate  and  House  commit- 
tees at  the  last  session  of  the  Congress.  Our  Chairman,  as  Sen- 
ator Frear  said  yesterday,  was  brow  beaten ;  he  was  insulted ; 
and  it  was  declared  by  a  representative  in  Congress  from  Illi- 
nois that  not  until  Congress  was  filled  with  anarchists  would 
such  a  measure  as  we  advocate  be  a'lop'e^l  l)y  Congress.     But 


81 

this  committee  had  got  in  its  work.  With  the  assistance  of  the 
President  the  people  became  aroused,  and  the  House  voted 
for  the  measure  that  was  finally  reported  by  the  committee. 
And  I  want  to  say  while  attending  the  Convention  at 
St.  Louis  one  year  ago,  our  Texas  friends  pledged  every  member 
of  Congress  and  Senator  from  Texas  to  support  the  meas- 
ure that  we  introduced.  I  could  not  make  such  a  pledge  for 
Iowa  at  that  time.  I  am  happy  to  say  today,  and  I  feel  that  I 
run  no  risk  in  saying  it,  that  both  Senators  and  every  member 
of  the  House  from  Iowa  will  in  the  next  Congress  support  the 
measure  advocated  by  this  Convention. 

The  remedy  that  we  have  sought  to  encourage,  the  object 
of  this  Convention,  has  been  to  encourage  the  people  to  arouse 
themselves  and  to  make  a  demand  upon  their  Congressmen  and 
upon  their  Senators  to  favor  the  measure  that  we  advocate.  And 
so  long  as  we  keep  up  that  pressure  I  have  no  fear  whatever  of 
the  result. 

Now  those  who  are  in  attendance  at  the  "^rump'  convention  here 
intended  to  meet  with  us  and  to  control  our  Convention,  and  not 
until  they  learned  that  we  had  determined  to  place  policemen 
at  our  doors  and  not  admit  them  unless  they  were  in  sympathy 
with  the  call,  did  they  give  up  that  intention  to  break  up  our 
meeting.  After  they  learned  this,  they  did  give  up.  Now,  the 
object  of  this  Convention  always  has  been  to  encourage  the  adop- 
tion of  proper  legislation.  The  Committee  on  Eesolutions 
could  not  give  attention  to  all  the  details.  I  suppose  we  had 
twenty  to  fifty  different  resolutions  presented.  We  concluded 
that  we  could  not  give  attention  to  all  the  little  details  that 
every  one  desired,  but  we  would  endorse  in  a  general  way  the 
spirit  of  this  cause.  We  desire  to  have  the  endorsement  of 
President  Eoosevelt  for  his  recommendations.  It  makes  the 
public  officers  strong  to  feel  that  the  people  are  at  their  back, 
that  they  are  supporting  them.  Is  not  that  so,  Governor  Van 
Sant?"  ■ 

Governor  Van  Sant  :  "Yes,  I  agree  with  anything  you  say, 
Governor." 

Governor  Larrabee  :  "A  public  officer,  wlien  he  feels  the 
people  are  back  of  him,  is  given  courage.  He  is  willing  to  go 
forward.  And  what  we  now  need  more  than  anything  else  is 
to  endorse  President  Eoosevelt  in  this  contest  between  the  rail- 
way managers  and  the  people.  Now  there  isn't  a  man  present 
in  this  Convention  who  is  an  enemy  to  railroads.  We  all  know 
there  is  no  one  intending  to  destroy  the  value  of  that  property. 
But  the  greatest  enemies  to  the  railways,  to  the  stockholders, 
are  the  kind  of  men  who  have  got  control  of  them  at  the  present 
time." 


82 

The  question  was  again  called  for. 

Judge  S.  H.  Cowan:  "Mr.  Chairman,  I  move  the  previous 
Xfuestion." 

The  motion  was  seconded. 

The  Chairman  :  Gentlemen,  we  have  some  reports  of  com- 
mittees, and  a  committee  to  be  appointed  as  yet.  Are  3^ou 
ready  for  the  question? 

Cries  of  "Yes,  yes." 

The  Chairman:  All  in  favor  of  adopting  the  report  of 
the  Committee  on  Eesolutions  signify  it  by  saying  "Aye." 

The  report  was  unanimously  adopted. 

.   Mr.  Murdo  Mackenzie:    Mr.  Chairman,  the  Finance  Com- 
mittee begs  to  submit  the  following  report : 

^^At  the  last  Convention  in  St.  Louis,  one  year  ago,  a  large 
amount  of  funds  was  subscribed  and  contributed  for  the  pur- 
poses of  conducting  the  work  of  the  Convention.     The  subscrip- 
tions of  the  various  organizations  were  generous,  and  it  was  only 
•fcy  these  that  the  work  could  have  been  conducted.     The  funds 
'have  been  expended  in  a  conservative  manner  by  your  Executive 
'Committee.     Your  committee  has  been  to  considerable  expense 
iin  addition  to  the  amount  subscribed,  and  we  eamestlv  urs^e 
•upon  this  Convention  the  raising  of  a  sum  commensurate  with 
tthe  purposes  of  the  Convention  and  the  importance  of  the  work 
un  which  it  is  engaged." 

"We  recommend  the  j)assage  of  the  following  resolution: 

■"Whereas,,  It  is  necessary  to  carry  on  the  work  of  the  Ex- 
'ecutive  Committee,  and  to  further  the  objects  and  purposes  of 
i;his  Convention ;  therefore  be  it 

"Resolved.  That  this  Convention  solicits  from  its  member- 
ship contributions  to  an  amount  not  less  than  $10,000.00,  which 
we  deem  to  be  absolutely  necessary  for  the  purpose  for  the 
^ensuing  year." 

"Gentlemen,  in  arriving  at  this  decision  as  to  the  amount  we 
should  require  to  carry  on  this  work,  some  of  us  who  were 
familiar  with  the  expense  of  conducting  the  campaign  last  year 
made  a  careful  estimate.  Last  year  I  had  the  honor  to  be  one 
of  the  Executive  Committee.  I  attended  several  meetings  along 
with  the  other  members  of  the  committee.  Not  one  single 
cent  of  the  money  subscribed  last  year  went  for  their  expenses. 
They  paid  that  out  of  their  own  pockets,  and  I  am  afraid  that 


83 

even  if  you  subscribe  $10,000,  your  Executive  Committee  for  the 
next  year  will  have  to  pay  something  similar  to  what  they  had 
to  last  year.  I  hope  that  the  delegates  present  will  see  it  to  be 
their  duty  to  subscribe  liberally. 

Now,  gentlemen,  I  don't  want  to  detain  you  long,  but  I  say 
to  you  this,  that  never  did  you  before  subscribe  to  a  fund  which 
is  more  necessary  for  the  well  being  of  your  business  than  the 
subscription  we  are  asking  of  you  today." 

By  motion,  duly  seconded  and  unanimously  carried,  the  re- 
port of  the  Finance  Committee  was  adopted. 

The  following  subscriptions  were  made  toward  the  fund 
necessary  to  carry  on  the  work  of  the  organization : 

American  Merchants'  &  Manufacturers'  Asso.,  H.  A.  Holmes, 

Ottawa,  Kan $200  00 

American  Stock  Growers'  Asso.,  Murdo  Mackenzie,  Trinidad, 

Col 200  00 

Central  Yellow  Pine  Association,  S.  W.  Gardiner,  Laurel,  Miss.     200  00 

Interstate  Saw  Mill  Association,  F.  E.  Waymer,  Jacksonville, 

Fla 50  00 

Millers'  National  Association  of  the  U.  S.,  F.  H.  Magdeburg. 

Milwaukee,  Wis 100  00 

Millinery  Jobbers'  Association,  Frederick  Bode,  Chicago,  111 .  .      200  00 

National   Association  of  Manufacturers  of  America,   Anthony 

Ittner,  St.  Louis,  Mo 100  00 

National  Hay  Association,  Geo.  S.  Bridge,  Chicago,  111 100  00 

National   League   of  Commission   Merchants,   F.    E.    Wagner, 

Chicago,  111 100  00 

National    Wholesale    Lumber    Dealers'    Association,    R.    W. 

Higbie,  New  York  City,  N.  Y.  _. 200  00 

Southwestern    Lumbermen's    Association,    E.    R.    Burkholder, 

McPherson,  Kan 200  00 

Travelers'  Protective  Association  of  America,  A.  E.  McKenzie, 

Denver,  Col 200  00 

Travelers'  Protective  Association  of  America,  Colorado  Divi- 
sion, A.  E.  McKenzie,  Denver,  Col 50  00 

Travelers'  Protective  Association  of  America,  Indiana  Division, 

A.  E.  MrKenzie,  Denver,  Co! 50  00 

Travelers'  Protective  Association  of  America,  Kentucky  Divi- 
sion, A.  E.  McKenzie,  Denver,  Col 50  00 

Western  Fruit  Jobbers'  Association,  E.  B.  Branch,  Omaha,  Neb.      100  00 

Wholesale  Saddlery  Association  of  the  U.  S.,  Henry  Othmer, 

Chicago,  111 100  00 

California  Fruit  Growers'  Associations,  F.  Q.  Storv,  Los  An- 
geles, Cal. '. 200  00 

California  Fruit  Growers'  Exchange,  E.  F.  Van  Luven,  Colton, 

Cal 500  00 

Los  Angeles  Chamber  of  Commerce,  Jos.  H.  Call,  Los  Angeles, 

Cal 100  00 

Pomona  Board  of  Trade,  E.  C.  Robinson,  Pomona,  Cal 200  00 

Redlands  Orange  Growers'  Association,  J.  S.  Edwards,  Red- 
lands,  Cal 100  00 

Denver  Chamber  of  Commerce,  J.  S.  Temple,  Denver,  Col ....       100  00 


84 

Trinidad  Chamber  of  Commerce,  Murdo  Mackenzie,  Trinidad, 

Col 100  00 

Continental   Land  &   Cattle   Co.,   Mnrdo   Mackenzie,   Trinidad, 

and  W.  E.  Hughes,  Denver,  Col 200  00 

Wm.  E.  Hughes,  Denver,  Col 100  00 

Geo.  J.  Kindel,  Denver,  Col 100  00 

Atlanta  Freight  Bureau,  W.  E.  Newill,  Atlanta,  Ga 60  00 

Savannah  Board  of  Trade,  W.  B.  Stillwell,  Savannah,  Ga 25  00 

Savannah  Chamber  of  Commerce,  W.  B.  Stillwell,  Savannah,  Ga.       25  00 
Illinois  Manufacturers'  Association,  John  E.  Wilder,  Chicago, 

III 200  00 

Fox  River  Valley  Manufacturers'  Association,  D.  W.  Simpson, 

Aurora,  111 100  00 

Chicago  Board  of  Trade,  R.  S.  Lyon,  Chicago,  111 400  00 

Indiana   Hardwood   Lumbermen's  Association,  J.   V.    Stinson, 

Huntingburg,  Ind 50  00 

Shippers'    Protective    League    of    Indiana,    J.    T.    Eaglesfield, 

Indianapolis,  Ind 100  00 

Evansville     Manufacturers'     Association,     A.     C.     Rosencranz, 

Evansville,    Ind 100  00 

D.  F.  Shiefe,  Ft.  Wayne,  Ind 100  00 

J.   V.   Stinson,   Huntingburg,   Ind 50  00 

John  W.  Kern  and  others,  Indianapolis,  Ind 200  00 

Iowa  Farmers'  &  Grain  Dealers'  Association,  C.  G.  Messerole, 

Mason  City,  la 50  00 

Kansas    Federation    of    Commercial    Interests,    J.    S.    George, 

Hutchinson,  Kan 200  00 

Wichita  Chamber  of  Commerce,  J.  E.  Howard,  Wichita.  Kan.  .      100  00 
J.  W.  Wells  (National  Association  of  Manufacturers  of  Amer- 
ica) ,  Menominee,  Mich 200  00 

Minnesota    Municipal    &    Commercial    League,   J.    Esbjornson, 

Litchfield,  Minn 100  00 

Meridian  Board  of  Trade,  C.  W.  Robinson,  Meridian,  Miss...      200  00 

Eastman,  Gardiner  &  Co.,  Meridian,  Miss 100  00 

St.    Louis    Manufacturers'    Association,    Anthony    Ittner,    St. 

Louis,  Mo 100  00 

St.  Louis  Merchants'  Exchange,  T.  R.  Ballard,  St.  Louis,  Mo. .      200  00 
Nebraska  Wholesale  Lumber  Dealers'  Association,  Wm.  Krot- 

ter,   Stuart,   Neb 100  00 

Edwin  B.  Pike,  Pike,  N.  H 100  00 

New  York  Cotton  Exchange,  W.  H.  Bartlett,  New  York  City. 

N.  Y 100  00 

Utica  Chamber  of  Commerce,  John  D.  Kernan,  Utica,  N.  Y.  .  .       100  00 
Ohio  Grain  Dealers'  Association,  J.  W.  McCord,  Columbus,  O.        25  00 

Ohio  Shippers'  Association,  J.  W.  McCord,  Columbus,  0 25  00 

Cincinnati  Receivers'  &  Shippers'  Association,  R.   P.   Gillham, 

Cincinnati,  0 100  00 

Oklahoma  City  Chamber  of  Commerce,  J.  H.  Johnston,  Okla- 
homa  City,  Okla 50  00 

Western  So.  Dak.  Stock  Growers'  Asso.,  F.  M.  Stewart,  Buf- 
falo Gap,  S.  D.  (Paid) 100  00 

Weston  Chamber  of  Commerce,  Weston,  S.  D 50  00 

Cattle  Raisers'  Association  of  Texas,  S.  B.  Burnett,  Ft.  Worth, 

Tex 200  00 

Texas    Grain   Dealers'    Association,   Jas.    Z.    Keel,    Gainesville, 

Tex ._ .' . .  .       100  00 

Grain  Dealers'  Association  of  Northern  Texas,  S.  B.  Burnett, 

Ft.  Worth,  Tex 100  00 

Dallas  Commercial  Club,  James  Maroney,  Dallas,  Tex 50  00 


85  ■ 

Dallas  Freight  Bureau,  J.  A.  Farley,  Dallas,  Tex 50  00 

Houston  Business  League,  J.  S.  Dougherty,  Houston,  Tex....  100  00 
Manufacturers'   Association  of   Seattle,   J.   W.   Kahle,   Seattle, 

Wash.    200  00 

Milwaukee  Chamber  of  Commerce,  F.  H.  Magdeburg,  Milwau- 
kee, Wis 200  00 

$8,300  00 

The    Chairman    announced    the    following    appointment    of 

members  of  the  Executive  Committee: 

E.  P.  Bacon;  Milwaukee,  Wis. 

C.  H.  Seybt,  St.  Louis,  Mo. 

E.  S.  Lyon,  Chicago,  111. 

S.  H.  Cowan,  Ft.  Worth,  Tex. 

J.  E.  Howard,  Wichita,  Kan. 

William  Larrabee,  Clermont,  la. 

E.  W.  Higbie,  'New  York  City,  N.  Y. 

Murdo  Mackenzie,  Trinidad,  Col. 

George  S.  Gardiner,  Laurel,  Miss. 

Adolph  Mueller,  Decatur,  111. 

J.  M.  Mason,  Charles  Town,  W.  Va. 

John  W.  Kern,  Indianapolis,  Ind. 

L.  C.  Slade,  Saginaw,  Mich. 

Jos.  H.  Call,  Los  Angeles,  Cal. 

W.  P.  Stillwell,  Savannah,  Ga. 
The  follo^A'ing  names  were  subsequently  added,  by  vote  of  the 
Convention : 

W.  E.  Hughes,  Denver,  Col. 

E.  H.  West,  Cincinnati,  0. 
Mr.  E.  W.  Higbie  offered  the  following: 

'^Resolved,  That  a  committee  of  five,  of  which  the  Chairman 
of  this  Convention,  Col.  W.  E.  Hughes,  shall  be  the  Chairman, 
be  appointed  by  the  Executive  Committee,  to  wait  upon  Presi- 
dent Eoosevelt  and  present  to  him  a  copy  of  the  resolutions  which 
we  have  adopted  and  which  are  set  forth  in  our  declaration  of 
principles;  and,  further, 

Besolved,  That  this  Convention,  through  this  same  commit- 
tee, shall  telegraph  to  the  President  of  the  United  States  at  once, 
that  this  Convention,  representing  forty-four  states  and  terri- 
tories, and  a  great  majority  of  the  business  and  producing  inter- 
ests of  this  country  has  unanimously  and  enthusiastically  en- 
dorsed his  position  upon  the  rate  question  as  enunciated  in  his 
message." 

The  resolution  was  unanimously  adopted. 


86 

The  Committee  on  Eesolutions  submitted  the  following: 

"Resolved,  That  we  hereby  extend  the  sincere  thanks  of  this 
organization  to  the  able  and  efficient  Chairman  of  our  Executive 
Committee,  Mr.  Edward  P.  Bacon,  of  Milwaukee,  Wisconsin,  for 
his  laborious,  energetic  and  able  services  in  presenting  the  neces- 
sity of  effective  control  by  the  Government  of  Interstate  Com- 
merce, and  in  pointing  out  and  demonstrating  the  error  of  meas- 
ures pressed  by  railway  interests." 

The  resolution  was  unanimously  adopted. 

Mr.  John  W.  Kern  moved  that  the  Executive  Committee  be 
authorized  and  directed  to  select  and  appoint  one  representative 
from  each  state  and  territory,  who  shall  be  charged  with  the  work 
of  organization  in  his  state,  under  the  direction  and  supervision 
of  the  Executive  Committee. 

The  motion  was  seconded  and  unanimously  adopted. 

Governor  Larrabee:  "The  Executive  Committee  proposes 
to  have  the  reports  and  proceedings  of  this  Convention  published. 
I  have  in  my  hand  an  address  by  Judge  Call,  who  was  invited 
by  Mr.  Bacon  to  deliver  an  address  to  this  Convention.  He  does 
not  feel  disposed  to  take  up  the  time  of  the  Convention.  I  ask 
leave  to  file  it  for  publication  with  the  minutes  of  the  proceedings. 

Also,  Mr.  Edward  Eosewater  was  invited  to  deliver  an  ad- 
dress. He,  too,  is  not  disposed  to  take  up  the  time  of  the  Con- 
vention. I  ask  leave  to  file  his  address  for  publication  with  the 
minutes  of  the  meeting. 

I  ask  leave  to  file,  for  printing  with  the  remarks  I  made, 
half  a  page  of  statistics,  which  I  desire  to  go  into  the  minutes,  if 
there  is  no  objection. 

Also,  Mr.  Silas  W.  Gardiner  is  not  disposed  to  take  up  the 
time  of  the  meeting.  I  ask  leave  to  file  his  remarks  for  publica- 
tion with  the  minutes." 

There  being  no  objection,  it  was  ordered  that  the  speeches 
of  the  gentlemen  named  by  ex-Governor  Larrabee  be  received  and 
printed  in  the  proceedings  of  this  Convention, 

EAILWAY  EATE  LEGISLATION. 

AN  ADDRESS  BY  JOSEPH  H.   CALL,  OF  LOS  ANGELES^  CAL. 

"I  read  in  the  Constitution  of  the  United  States  that  Con- 
gress has  been  given  by  that  instrument  the  comprehensive  and 
plenary  power  to  regulate  commerce  with  foreign  nations,  and 
among  the  several  states,  to  establish  post  roads  and  postoffices. 


87 

I  learn  from  the  decisions  of  the  Supreme  Court  of  the 
United  States  for  the  last  third  of  a  century  that  Congress  has 
the  power  to  construct  railways,  and  that  the  power  to  regulate 
commerce  includes  the  power  to  establish  rates  for  transporta- 
tion. 

I  learn  from  official  reports  and  from  the  public  press  of 
the  country,  which  statements  have  passed  without  dispute,  that 
the  vast  commerce  of  the  United  States,  embracing  more  than 
220,000  miles  of  railways,  is  now  in  the  practical  control  of  a 
few  men  who,  by  combinations  of  railways  and  the  organiza- 
■fion  of  holding  companies,  have  acquired  and  now  exercise  the 
vast  power  to  regulate  the  commerce  of  the  United  States,  which 
has  been  granted  to  Congress  by  the  Constitution. 

This  handful  of  men  in  the  exercise  of  the  power  to  regu- 
late commerce  annually  take  from  the  people  two  billions  of 
dollars  as  gross  income,  and  eight  hundred  millions  as  net  in- 
come without  the  people  being  represented  in  the  taking,  yet  the 
Constitution  prohibits  taxation  without  representation. 

The  framers  of  the  Constitution  plainly  saw  that  the  power 
to  regulate  commerce  was  one  of  the  most  important  of  govern- 
mental functions,  and  that  if  the  United  States  were  to  be  a 
nation,  with  the  usual  attributes  and  powers  of  nations,  this 
power  to  regulate  commerce  must  be  lodged  somewhere. 

Theoretically,  the  powers  of  the  government  are  divided  by 
the  Constitution  into  three  departments— namely,  legislative, 
executive  and  judicial,  but  practically  there  is  in  this,  as  in 
other  governments,  such  an  intermingling  of  powers  that  there 
is  no  exact  line  of  demarkation  between  what  is  legislative,  ex- 
ecutive, or  judicial,  and  the  framers  of  the  Constitution  have 
not  undertaken  to  classify  the  powers  in  all  respects. 

Upon  Congress  is  conferred  a  power  which  is  clearly  judicial 
in  the  matter  of  impeachment  proceedings,  and  the  organiza- 
tion of  an  impeachment  court. 

The  Supreme  Court  of  the  United  States  has,  almost  from 
the  beginning  of  government,  exercised  powers  of  a  legislative 
nature,  in  the  framing  of  practice  acts  for  the  courts  of  equity, 
of  bankruptcy  and  admiralty,  and  these  practice  acts  or  rules 
have  been  given  the  force  of  legislative  enactments  by  judicial 
decisions. 

The  courts  of  equity  of  the  United  States,  exercising  the 
powers  of  English  chancery  courts,  have  always  by  their  de- 
crees and  injunctions,  operated  in  personam,  and  govern  the 
future  conduct  of  individuals  as  effectually  as  they  could  be 
governed  by  legislative  acts. 

The  regulation  of  commerce  is  not  a  purely  legislative  func- 
tion, any  more  than  it  is  judicial  or  administrative.  It  is  a 
commingling  of  the  three  powers,  but  as  it  has  to  be  lodged 


88 

in  some  department  it  was  turned  over  to  Congress  by  the  Con- 
stitution. 

The  Supreme  Court  of  the  United  States  has  said  repeatedly 
that  legislative  powers  and  administrative  powers  cannot  be  cast 
upon  the  courts  of  the  XJ-uitcu  Ctu'teb  by  act  of  Cougreo&,  al- 
though we  know  that  in  many  instances,  as  above  mentioned, 
they  have  in  fact  exercised  powers  of  a  legislative  character. 

The  Supreme  Court  has  also  decided  that  the  power  to  pre- 
scribe tariffs  of  rates  for  railway  transportation  for  the  future 
is  a  legislative  function,  and  is  not  judicial,  and  that  the  power 
to  determine  the  reasonableness  of  rates  for  the  past  as  well  as 
present  rates,  under  given  conditions  and  circimistances,  is 
judicial. 

This  exceeding  refinement  and  division  in  the  matter  of 
regulating  commerce  was,  of  course,  not  intended  to  confuse 
the  government  in  attempting  to  regulate  the  great  railways 
of  the  country,  but  doubtless  arose  out  of  inadequate  provisions 
of  the  laws  of  Congress  for  the  regulation  of  commerce. 

The  Supreme  Court  has  also  frequently  decided  that  the 
regulation  of  commerce,  which  was  conferred  upon  Congress, 
includes  and  comprehends  the  fixing  of  railway  rates,  and  that 
the  several  states  have  no  power,  directly  or  indirectly,  to  pre- 
scribe rates  as  to  interstate  commerce. 

That  high  court  has  also  decided  that  the  power  to  operate 
a  railroad  is  a  governmental  franchise,  which  emanates  from 
the  state  or  nation,  and  cannot  be  exercised  by  an  individual, 
or  corporation,  without  such  state  or  national  authority. 

FORMER  CO^^GRESSIONAL  LEGISLATION. 

Under  the  great  national  power  to.  regulate  commerce  Con- 
gress has  done  very  little  in  the  matter  of  regulating  the  vast 
commerce  of  the  United  States  carried  on  by  railways. 

It  has  declared  the  railways  of  the  United  States  to  be  post 
routes,  and  the  jnails  of  the  United  States  are  transported  over 
the  railways  as  such,  but  the  United  States,  while  furnishing 
the  equipment  or  railway  cars  for  transporting  tlie  mails,  pays 
an  amount  exceeding  ten  times  as  much  per  ton  per  mile  for 
the  transporting  of  the  mails  as  is  paid  by  individuals  for  freight 
hauled  upon  the  same  lines,  where  the  railways  furnish  the 
cars  and  other  equipment. 

In  1887  Congress  created  the  Interstate  Commerce  Com- 
mission, and  empowered  that  body  to  secure  annual  reports  from 
the  railways,  and  to  entertain  and  hear  complaints  as  to  the 
reasonableness  of  rates,  and  of  discriminations  practiced  by  the 
carriers.  That  act  also  provided  that  all  rates  for  interstate 
carriage  should  be  reasonable  and  just,  and  the  act  prohibited 
railways  from  charging  unreasonable  and  unjust  rates. 


89 

The  act  also  expressly  empowered  the  Commission  to  ex- 
ecute all  of  the  provisions  of  that  act. 

Under  these  provisions  the  Interstate  Commerce  Commis- 
sion proceeded  to  determine  the  reasonableness  of  railway  rates 
in  many  instances,  and  issned  many  orders  reducing  rates  which 
it  considered  unreasonable,  discriminatory  or  unjust,  and  most 
of  these  orders  were  obeyed  by  the  railways. 

A  list  of  several  hundred  such  orders  and  decisions  was  fur- 
nished to  the  Senate  Committee  on  Interstate  Commerce  at  its 
recent  investigation. 

Congress  did  not  at  any  time  specifically  authorize  the  rail- 
ways themselves  to  finally  fix  and  determine  their  tariffs  of 
rates,  nor  did  Congress  specifically  empower  the  Interstate  Com- 
merce Commission  to  fix  such  rates,  but  it  was  supposed  that 
when  Congress  prohibited  the  railways  from  charging  unrea- 
sonable rates,  and  expressly  authorized  the  Commission  to  en- 
force all  of  the  provisions  of  the  commerce  act,  these  laws,  by 
necessary  implication,  conferred  upon  the  Commission  the 
power  to  prohibit  the  charging  of  unreasonable  rates,  and  neces- 
sarily the  power  to  prescribe  reasonable  maximum  rates  in  any 
given  case. 

It  has  always  been  a  doctrine  in  England  and  in  the  United 
States,  in  the  construction  of  statutes,  that  all  powers,  fran- 
chises and  rights  claimed  by  private  corporations  or  individuals 
as  against  the  nation,  the  state  and  the  public,  were  to  be  strictly 
construed  in  favor  of  the  grantor,  and  that  no  such  power,  fran- 
chise, right  or  authority  could  be  held  or  exercised  unless  con- 
ferred by  clear  and  unequivocal  language,  and  that  in  all  cases 
of  doubt  or  ambiguity  the  power,  franchise  or  right  so  claimed 
would  be  withheld. 

In  this  condition  of  the  laws  and  decision,  a  case  came  up 
in  the  Supreme  Court  of  the  United  States  for  final  decision 
in  March,  1896,  entitled  Cincinnati  Eailway  vs.  Interstate  Com- 
merce Commission,  reported  in  162  U.  S.,  184,  196,  which  suit 
involved  the  validity  of  certain  orders  as  to  rates  made  by  the 
Interstate  Commerce  Commission,  and  in  the  decision  of  that 
case  the  Supreme  Court  of  the  United  States  used  the  follow- 
ing language,  referring  to  the  powers  of  the  Interstate  Com- 
merce Commission  under  the  act  of  1887 : 

"Whether  Congress  intended  to  confer  upon  the  Interstate 
Commerce  Commission  the  power  to  itself  fix  rates  was  mooted 
in  the  courts  below,  and  is  discussed  in  the  briefs  of  counsel. 
We  do  not  find  any  provision  of  the  act  that  expressly,  or  by 
necessary  implication,  confers  such  a  power." 

In  subsequent  cases  the  Supreme  Court  in  effect  said  that 
they  had  decided  in  the  Cincinnati  Railway  case  that  the  In- 
terstate  Commerce   Commission   did  not  have  the  power,  di- 


90 

rectly  or  indirectly,  to  prescribe  or  fix  maximum  railway  rates. 

Nothing  that  has  occurred  in  the  United  States  since  the 
Dred  Scott  decision  has  had  such  momentous  consequences  as 
the  decision  in  the  Cincinnati  Kailway  case. 

The  effect  of  the  decision  was  to  turn  over  to  the  railways 
themselves  the  unrestricted  power  to  prescribe  tariffs  of  railway 
rates,  a  power  which  was  not  specifically  granted  to  them  by 
the  interstate  commerce  act,  or  by  any  law  of  Congress,  which 
power  thus  became  vested  in  the  railways,  upon  an  implica- 
tion contrary  to  the  settled  doctrine  of  strict  construction  in 
the  matter  of  the  granting  of  franchises  and  rights  claimed 
against  the  public  and  the  government. 

The  court,  instead  of  construing  the  claims  of  the  railways 
strictly,  turned  the  rule  around,  and  construed  the  powers  of 
the  officers  of  the  United  States  and  its  agencies  strictly,  which 
by  necessary  implication  enlarged  the  powers  of  railways  claim- 
ing them. 

The  situation  concerning  the  powers  claimed  by  the  rail- 
ways on  one  side,  and  the  rights  of  the  nation  and  the  public 
on  the  other,  is  peculiar,  for  whatever  is  taken  away  from  one 
side  must  necessarily  be  given  to  the  other. 

The  effect  of  that  decision  had  a  marked  influence  upon  the 
charges  made  by  railways  for  transportation  and  the  earnings 
of  the  roads,  and  operated  to  pile  up  among  a  few  large  rail- 
way corporations  a  large  part  of  the  earnings  of  the  country  in 
the  course  of  a  few  short  years. 

Statistical  reports  of  the  government  (1)  show  that  the 
net  income,  which  comprehends  the  earnings  from  operation  and 
other  sources,  after  deducting  operating  expenses,  was  in  the 
year  ending  June  30,  1896,  $2,698  per  mile  of  road  and  aggre- 
gated $494,655,019,  and  in  the  seventh  year  succeeding  the  de- 
cision of  the  Supreme  Court  in  the  Cincinnati  case,  in  the  year 
ending  June  30,  1903,  such  net  income  per  mile  of  road  was 
$4,137,  and  amounted  in  the  aggregate  to  $848,995,935,  ex- 
cluding all  earnings  and  income  of  express  car  companies,  sleep- 
ing car  companies,  private  car  lines  and  telegraphs. 

During  that  period  the  cost  of  operation  in  proportion  to 
the  volume  of  business  was  also  largely  reduced. 

Other  government  statistics  (2)  show  that  in  1890  the  total 
wealth  of  the  United  States  was  sixty-five  billions  of  dollars, 
and  that  in  1900  the  total  wealth  was  ninety-four  billions;  that 
the  average  yearly  advance  in  values  of  all  property  in  the 
United  States  is  about  4  percentum,  and  that  as  the  population 
increases  about  2  percentum,  the  total  average  increase  of  wealth 
from  all  sources  for  the  population  of  the  United  States  aver- 

(1)  Statistics,  1903,  Interstate   Commerce   Commission. 

(2)  Statistics,  1904,  Dept.  Commerce  and  Labor. 


91 

ages  about  2  per  centum  per  capita,  and  about  $20  per  ye^r, 
on  an  average  for  each  inhabitant.  The  average  wealth  per 
capita  was  $1,038  in  1890,  and  $1,235  in  $1900. 

The  gross  income  of  the  railways  exceeds  two  billions  of 
dollars  a  year,  and  is  about  four  times  the  gross  income  of  the 
United  States  government. 

These  statistics  also  show  that  the  commercial  value  of  the 
railways  of  the  United  States  on  June  30,  1904,  was  eleven 
billions  of  dollars,  and  that  the  total  assessed  value  of  the  rail- 
ways at  the  same  time  was  three  billions  of  dollars. 

These  statistics  show  that  in  the  seven  years  following  the 
Cincinnati  Eailway  case  in  1896  the  railways  increased  their 
net  income  per  mile  of  railroad  more  than  73  percentum;  that 
their  net  earnings  exceed  $10  per  capita  per  year  for  the  en- 
tire population  of  the  United  States,  and  exceed  one-half  of 
the  average  annual  increase  of  wealth  of  all  the  people  of  the 
United  States. 

That  the  railways,  having  a  commercial  value  of  one-tenth 
of  all  of  the  property  in  the  United  States,  and  having  an  as- 
sessed value  of  less  than  one-thirty-seventh  of  the  whole  prop- 
ert}'',  are  annually  absorbing  as  net  income  more  than  one- 
half  of  the  average  increase  of  wealth  per  inhabitant. 

That  with  a  commercial  value  which  is  based  upon  the  in- 
flated value  of  bonds  and  stocks,  which  are  based  in  turn  upon 
the  earning  capacity  of  the  road,  the  railways  representing  one- 
tenth  of  all  of  the  property  of  the  country,  are  casting  a  burden 
upon  the  people  of  the  United  States  of  four  times  the  entire 
amount  of  taxes  and  income  collected  by  the  United  States  gov- 
ernment. 

During  the  seven  years  succeeding  the  decision  in  the  Cin- 
cinnati Railway  case,  denying  the  power  of  the  Commission 
to  prescribe  maximum  rates,  it  is  thus  seen  that  the  net  income 
per  mile  of  the  railways  has  increased  more  than  73  percentum 
per  mile,  and  the  net  income  is  about  8  percentum  per  year 
upon  the  commercial  value  of  the  roads. 

The  remedy  proposed  by  the  President,  and  which  we  have 
long  advocated,  is  to  confer  upon  the  Interstate  Commerce  Com- 
mission supervision  of  the  rate-making  power,  which  body  con- 
stitutionally may  exercise  this  combined  legislative  and  admin- 
istrative duty,  and  which  cannot  be  conferred  upon  a  court  of 
the  United  States,  as  proposed  in  what  has  been  termed  the 
Grosscup  plan.  The  authorities  supporting  this  doctrine  are 
reviewed  by  the  Attorney  General  in  his  recent  letter  to  the 
Senate  Commerce  Committee,  and  the  soundness  of  the  prin- 
ciple was  fully  conceded  before  that  committee  by  Judge  Mora- 
wetz,  who  appeared  for  the  railways. 


92 

The  histories  of  nations  inform  us  that  the  regulation  of 
commerce  is  the  most  important  of  all  governmental  functions, 
and  it  has  been  well  said  that  he  who  regulates  the  commerce 
of  a  country  controls  the  nation  itself. 

The  Supreme  Court  has  many  times  informed  the  American 
people  that  the  regulation  of  commerce,  including  tlie  fixing 
of  rates,  is  a  governmental  function,  which  the  constitution  has 
conferred  upon  Congress.  There  are  persons  who  -advocate  that 
Congress  cannot,  or  should  not,  delegate  the  power  to  make 
rates.  These  people  pretend  that  grave  constitutional  ques- 
tions are  involved,  and  that  great  wrong  is  going  to  result  from 
such  a  delegation  of  power.  The  United  States  courts  have 
frequently  held  that  legislatures  of  the  states  had  a  right  to 
delegate  these  powers  to  commissions,  and  there  is  no  reason 
why  Congress  should  not  have  the  same  power  as  to  interstate 
commerce  that  a  state  has  concerning  the  commerce  of  the  state. 
If  it  be  wrong  or  bad  policy  to  delegate  this  power,  then  Con- 
gress has  committed  a  woeful  wrong  in  delegating  to  the  rail- 
roads the  power  to  fix  these  rates. 

It  is  also  strenuously  contended  by  railway  attorneys  and 
presidents  that  the  constitutional  provision  against  discrimina- 
tion between  ports  of  the  several  states  will  present  a  constitu- 
tional objection  to  Congress  or  to  any  commission  created  by 
Congress  to  establish  terminal  rates  between  points  upon  the 
ports  and  tide  waters,  and  that  the  railways  alone  can  make 
low  rates  for  such  through  long  hauls. 

In  making  this  contention  the  railway  people  ignore  re- 
peated decisions  of  the  Supreme  Court  of  the  United  States, 
deciding  that  the  determination  of  rates  by  the  Interstate  Com- 
merce Commission  must  be  controlled  by  water  and  rail  com- 
petition, and  that  the  very  fact  that  there  is  competition  affect- 
ing such  rates  is  a  feature  which  cannot  be  ignored  in  determin- 
ing the  reasonableness  of  such  rates. 

If,  however,  there  were  anything  in  the  contention  it  would 
prove  that  the  railways  could  not  reduce  such  rates  between 
water  points  if  Congress  could  not  do  so,  because  the  railways 
themselves,  in  fixing  rates,  are  exercising  a  governmental  fran- 
chise, and  derive  their  authority  under  the  commerce  clause 
of  the  Constitution,  and  if  Congress  cannot  delegate  power  to 
a  commission  to  fix  rates,  having  consideration  of  competition 
by  water  and  rail,  it  cannot  delegate  that  power  to  another  pub- 
lic agency,  such  as  a  railway. 

The  testimony  taken  before  the  Senate  Committee  on  In- 
terstate Commerce,  at  the  recent  hearing,  showed  that  more 
than  two-thirds  of  the  railway  mileage  of  the  United  States 
had  fallen  into  the  hands  of  half  a  dozen  corporations  or  syn- 
dicates, and  it  is  a  matter  of  common  knowledge,  which  none 


93 

will  dispute,  that  half  a  dozen  Morgans  and  Eockefellers  actually 
exercise  the  vast  governmental  power  to  regulate  commerce 
among  the  states  of  the  American  union,  a  political  power  more 
vast  than  all  of  the  other  powers  which  are  exercised  by  Congress. 

There  are  those  who  now  argue  and  contend  that  this  power 
is  so  great  and  important  that  it  should  not  be  entrusted  to 
any  governmental  body,  but  on  account  of  its  very  greatness 
and  importance  it  should  be  left  in  the  hands  of  the  present 
private  owners,  who  fix  rates  and  conditions  for  the  movement 
of  transportation  solely  for  their  own  benefit  and  aggrandize- 
ment, and  to  consummate  the  greatest  spoliation  of  the  public 
rights. 

Those  who  contend  that  such  great  governmental  powers 
should  be  possessed  and  exercised  by  a  body  of  men  who  are 
not  under  strict  governmental  control  seem  to  forget  that  the 
principle  which  they  contend  for  is  one  in  favor  of  an  abso- 
lutism as  against  republican  government. 

The  argument  which  our  opponents  are  making,  in  effect, 
is  that  such  a  power  as  is  exercised  in  Russia,  through  bureaus 
and  officers  over  which  the  people  have  no  control,  is  preferable 
to  the  placing  of  such  control  in  the  hands  of  the  nation,  which 
is  controlled  by  its  people. 

People  who  make  such  arguments  against  government  rate 
control  in  the  United  States  are  at  heart  not  only  monarchists, 
but  they  are  in  favor  of  absolutism. 

OUR   PRESENT  REMEDIES  AND   RIGHTS. 

The  Government  has  no  power  to  reduce  a  rate. 

The  rights  given  under  the  present  laws  by  the  present  in- 
terstate commerce  act.  to  the  aggrieved  public,  are  to  file  a 
complaint  with  the  Commission,  and  the  Commission  then  is 
to  serve  notice  upon  the  railways  complained  of,  who  file 
answers.  Time  is  then  fixed  for  the  taking  of  testimony.  After 
the  testimony  has  been  taken  in  various  places  throughout  the 
country,  the  case  is  argued  to  the  Connnission  at  some  subse- 
quent period,  orally  and  upon  briefs,  and  after  a  further  period 
of  time  the  Commission  makes  a  report,  and  if  the  matter  com- 
plained of  is  as  to  the  reasonableness  of  rates,  the  Commission 
makes  findings  upon  that  subject.  If  the  findings  are  against 
the  railways  they  ignore  the  ordar  of  the  Commission,  and  the 
Commission  has  no  power  to  enforce  the  order. 

Proceedings  are  then  brought  in  the  courts  by  the  Commis- 
sion to  enforce  the  order,  and  the  courts,  following  the  decision 
in  the  Cincinnati  Railway  case,  rendered  in  1896,  decide  that 
the  Commission  has  no  power  to  prescribe  rates  for. the  future, 
and  that  its  order  is  consequently  void. 

It  is  thus  seen  that  this  munificent  law  has  conferred  upon 
the   aggrieved   public   the   inestimable   advantage   of   litigating 


94 

before  the  Commission  and  courts  for  a  long  series  of  years,  a 
question  as  to  the  reasonableness  of  rates,  without  the  power 
being  lodged  in  either  tribunal  to  restrict  the  rates  complained 
of,  and  during  the  interim  (which,  as  I  have  before  pointed  out, 
has  averaged  seven  and  a  half  years  from  the  time  complaint 
was  filed  with  the  Commission  until  the  Supreme  Court  ulti- 
mately decided  that  the  order  of  the  Commission  was  void), 
the  railways  collect  the  excessive  rate. 

The  bare  statement  of  these  conditions  is  a  serious  reflec- 
tion upon  the  intelligence  of  the  American  people.  It  is  al- 
most incredible  to  think  that  they  should  be  fooled  so  long 
into  believing  that  some  rights  were  conferred  upon  them  by 
the  interstate  commerce  act. 

During  all  the  period  of  litigation  in  these  railway  cases, 
as  well  as  after  its  termination,  the  railroads,  if  they  see  fit, 
continue  to  exact  the  same  old  charge,  and  compel  the  public 
to  pay  it,  or,  they  may  go  further  and  increase  the  rate  during 
the  pendency  of  the  litigation,  and  there  is  no  power  to  pre- 
vent them  from  doing  that. 

We  have  again  and  again  complained  to  Congress  of  this 
condition  of  affairs,  and  still  the  spoliation  of  the  public  has 
gone  on  while  the  vast  net  earnings  of  the  railways  have  ab- 
sorbed the  earnings  of  the  American  people  from  year  to  year, 
which  have  piled  up  in  the  treasuries  of  the  railways  or  have 
been  distributed  to  manipulators  of  such  railways. 

No  response  was  given  to  the  demand  of  the  public  to  remedy 
these  conditions  until  Theodore  Eoosevelt  became  President  of 
the  United  States,  when  he  recommended  to  Congress  that  the 
Interstate  Commerce  Commission  should  be  given  authority  to 
prescribe  a  reasonable  maximum  rate  in  any  case  where  the 
Commission  had  found  the  existing  rate  to  be  unjust  and  un- 
reasonable, and  that  such  order  and  decision  of  the  Commission 
should  take  immediate  effect,  and  should  not  be  suspended  ex- 
cept by  a  court  upon  review. 

In  response  to  this  recommendation  the  House  of  Eep- 
resentatives  passed  the  Esch-Townsend  bill,  which  was  in  sub- 
stantial conformity  to  the  President's  recommendation. 

When  that  bill  came  before  the  Senate,  instead  of  passing 
it  at  once,  as  the  situation  for  more  than  eight  years  demon- 
strated it  should  do,  it  referred  the  bill  to  its  Committee  upon 
Interstate  Commerce,  and  that  committee  has  taken  many  weeks 
in  the  investigation  of  the  railway  rate  situation. 

The  railways  themselves  procured  shippers,  who  were  doubt- 
less influenced  more  or  less  by  private  reasons,  to  file  protests 
against  the  passage  of  the  Esch-Townsend  bill,  and  against  the 
granting  to  the  Interstate  Commerce  Commission  of  the  power 
as  recommended  by  the  President. 


95 

These  protests  should  be  taken  at  their  value,  for  they  do 
not  emanate  from  those  who  pay  the  freight.  Shippers  and 
wholesale  dealers,  who  thus  so  vigorously  protested,  do  not  carry 
the  burden  of  the  excess  railway  charge.  They  add  to  the  bill 
of  the  retail  buyer  and  consumer  tlie  price  of  the  freight,  and 
that  excess  falls  ultimately  upon  the  consumer,  so  that  it  is 
not  a  matter  of  either  loss  or  gain  to  such  wholesale  dealers 
whether  the  rate  be  more  or  less. 

LEGISLATION   DEMANDED  AND   PROPOSED. 

What  the  public  demands  is  that  the  power  to  regulate  com- 
merce, which,  in  its  exact  application  means  the  power  to  fix 
railway  rates,  shall  be  taken  away  from  the  handful  of  railway 
manipulators,  where  it  is  now  lodged,  and  shall  be  resumed  by 
the  government  and  conferred  upon  an  independent  public  body. 

The  railways  now  propose  to  establish  some  sort  of  a  com- 
merce court  and  propose  to  provide  by  enactment  that  com- 
plaint as  to  railway  rates  shall  be  first  presented  to  the  Inter- 
state Commerce  Commission,  and  then,  if  found  to  be  mer- 
itorious, that  a  suit  shall  be  brought  and  tried  before  such  com- 
merce court.  The  so-called  Grosscup  plan  is  typical  of  this  gold 
brick  legislation. 

Now,  as  before  stated,  there  is  no  principle  of  law  more 
firmly  settled  and  established  in  this  country  than  that  the  courts 
of  the  United  States  will  not  undertake  the  power  to  fix  railway 
rates  for  the  future. 

The  proposition  of  the  railways,  in  plain  language,  is  to 
again  deceive  the  people  by  creating  a  mock  tribunal  and  present 
to  it  a  moot  question,  without  the  power  being  given  to  any 
one  to  decide  the  point  involved  or  to  remedy  the  wrong. 

We  are  not  ignorant  of  our  rights  under  the  Constitution 
of  the  United  States,  and  we  know  that  we  now  have  the  right 
to  go  into  any  court  of  proper  jurisdiction,  and  to  sue  for  and 
recover  unreasonable  railway  rates  which  have  been  exacted  by 
combinations  of  roads.  The  proposed  railway  measure,  which 
has  received  the  sanction  of  Judge  Grosscup,  proposes  to  do 
nothing  more  nor  less,  nor  other,  than  to  authorize  suit  to  be 
brought  for  unreasonable  rates  exacted  by  carriers,  but  it  pro- 
poses that  before  such  suit  can  be  In'ought,  complaint  must 
be  made  to  the  Interstate  Commerce  Commission,  and  thus  cast 
an  impediment  before  the  complaining  people,  which  cannot  be 
removed  until  the  Commerce  Commission  has  acted,  and  that 
instead  of  giving  the  aggrieved  public  the  right  to  prosecute 
in  the  first  case,  it  takes  the  control  away  from  them  and  places 
it  in  the  hands  of  the  Commerce  Commission,  or  the  attorneys 
representing  it. 

We  are  quite  familiar  with  the  guaranties  in  the  Constitu- 
tion of  the  United  States,  taken  from  the  great  charter  of  King 


96 

John,  which  provide  that  no  person  shall  Ije  deprived  of  life, 
liberty  or  property  without  due  process  of  law. 

The  fifth  amendment  to  the  Constitution  of  the  United 
States  provides  that  the  United  States  and  its  agencies  shall  not 
deprive  any  person  of  life,  liberty  or  property  without  due 
process  of  law,  and  the  fourteenth  amendment  provides  that  no 
state  or  its  agencies  shall  deprive  any  person  of  life,  liberty  or 
property  without  due  process  of  law.  The  one  operates  upon 
the  government  and  its  agencies,  and  tlie  other  operates  upon 
the  states. 

For  many  years  it  has  been  a  favorite  pastime  of  the  rail- 
ways to  invoke  the  provisions  of  the  fourteenth  amendment 
against  the  states  and  their  agencies,  such  as  Eailway  Com- 
missioners, to  prevent  the  charging  and  fixingof  maximum  rail- 
way rates,  upon  the  ground  that  such  acts  involve  the  taJcing 
of  their  property  without  due  process  of  law,  and  without  com- 
pensation, and  the  Supreme  Court  of  the  Uiftted  States  has 
uniformly  held  that  when  the  states,  through  any  public  agency, 
prescribed  a  railway  rate  which  required  freight  or  passengers 
to  be  carried  at  a  price  leaving  no  profit  or  return  upon  the 
capital  invested,  they  violated  the  fourteenth  amendment  to  the 
Constitution  of  the  United  States. 

We  are  aware  that  the  interstate  commerce  railways  of  the 
United  States  now  exercise  the  power  to  fix  railway  rates  under 
the  interstate  commerce  act,  as  construed  by  the  Supreme  Court 
of  the  United  States,  and  that  without  this  governmental  au- 
thority and  franchise  they  cannot  operate  a  railroad  or  fix  a 
rate  at  all. 

These  railways  have  now  combined  together,  and  nearly  all 
of  the  rates  in  the  United  States  are  now  fixed  by  combination, 
as  is  evidenced  by  the  tariffs  on  file  with  the  Interstate  Com- 
merce Commission,  and  these  rates  have,  from  time  to  time,  been 
raised,  and  the  net  earnings  of  the  carriers  have  been  from  time 
to  time  increased  until  they  have  now  swollen  to  enormous  pro- 
portions. 

We  are  well  aware  that  we  may  now  go  into  the  courts  of 
the  United  States,  in  any  case  where  the  railways  are  charging 
unreasonable  and  unjust  rates,  fixed  by  combination  between 
competing  lines,  and  recover  such  charges,  wherever  made,  what- 
ever the  law  of  Congress  may  l)e  upon  the  subject,  as  in  such 
exactions  and  charges  the  railways  under  powers  and  franchises 
derived  from  the  United  States  are  taking  from  us  our  prop- 
erty Avithout  due  process  of  law,  and  in  violation  of  the  fifth 
amendment,  as  clearly  as  did  the  Railway  Commissioners  of  the 
states  deprive  the  railways  of  their  property  in  fixing  rates  too 
low  in  violation  of  the  fourteenth  amendment. 

There  are  certain  glaring  omissions  in  these  measures  form- 
ulated by  railway  interests,  typified  in  the  Grosscup  bill,  which 


97 

stand  out  so  boldly  as  to  attract  the  attention  of  all  intelligent 
people  familiar  with  the  demands  of  the  country  for  legisla- 
tion which  will  restore  to  the  public  some  of  their  rights  regard- 
ing the  making  of  rates. 

First. — The  Grosscup  bill  does  not  give,  or  propose  to  con- 
fer upon  the  Interstate  Commerce  Commission,  or  upon  any 
bureau  or  department  of  the  government,  any  power  to  restrict 
unreasonable  rates,  to  establish  maximum  tariffs,  or  to  substi- 
tute a  reasonable  rate  for  an  unreasonable  and  unjust  one. 

Second. — This  bill  does  not  confer,  or  propose  to  confer,  any 
of  those  powers  upon  the  transportation  court  proposed  to  be 
established,  which  powers,  of  course,  could  not  be  conferred 
constitutionally  upon  such  a  court,  being  a  court  of  the  United 
States,  and  the  powers  being  essentially  legislative  or  adminis- 
trative in  character. 

Third. — The  bill  does  not  extend,  nor  propose  to  extend,  to 
the  public  any  right,  privilege  or  facility  for  the  recovery  of 
unjust  and  illegal  overcharges,  which  does  not  exist  under  the 
present  law  and  in  the  present  courts,  but,  on  the  contrary,  pro- 
poses to  confer  upon  a  bureau  the  right  to  investigate  unrea- 
sonable rates,  and  upon  a  transportation  court  the  right  to  liti- 
gate such  questions,  and  thus,  in  effect,  take  away  or  hamper 
the  right  of  the  public  to  recover  overcharges  in  the  ordinary 
courts,  and  in  the  local  tribunals. 

The  effect  of  the  bill  is  to  require  the  wronged  public  to 
initiate  their  proceedings  at  Washington,  three  thousand  miles 
from  the  Pacific  coast,  and  a  thousand  miles  from  Chicago  and 
Mississippi  river  points,  and  there  obtain  the  permission  of 
bureau  officers  to  litigate  before  another  court  at  as  great  a 
distance  the  question  as  to  the  reasonableness  of  rates,  without 
empowering  any  officer  or  tribunal,  in  the  end,  to  substitute 
a  reasonable  for  an  unreasonable  rate. 

I  will  not  attempt  at  this  time  to  discuss  the  constitutional- 
ity of  such  legislation  under  the  provisions  of  the  fifth  amend- 
ment to  the  Constitution,  which  prohibits  the  taking  of  prop- 
erty without  due  process  of  law. 

Fourth. — The  Grosscup  bill,  in  its  legal  effect,  operates  to 
repeal  all  of  the  provisions  of  the  present  interstate  commerce 
laws  and  the  Sherman  act,  so  far  as  inconsistent  with  these 
provisions  which  now  confer  upon  the  public  valuably  rights 
and  remedies,  and  among  others  the  right  to  avail  themselves 
of  the  reports  of  the  Interstate  Commerce  Commission  as  prima 
facie  evidence  in  suits  for  overcharges  and  other  actions,  and 
the  right  to  recover  treble  damages  where  rates  are  exacted  by 
combination  in  restraint  of  commerce,  and  in  the  right  to  sue 
non-resident  railways  in  the  local  district  where  suit  is  brought 
upon  a  report  of  the  Interstate  Commerce  Commission. 


98 

The  railways  now  hold  many  millions  of  dollars,  illegally 
exacted  from  the  public,  which  can  doubtless  be  recovered  under 
existing  laws,  and  any  bill  which  in  its  legal  effect  operates  to 
repeal  the  existing  law  on  this  subject  will  take  away  from  the 
public  their  rights  and  remedies  without  compensation,  and  will 
result  in  spoliation  of  public  interests. 

We  are  not  deceived  by  the  provisions  of  the  so-called  Gross- 
cup  bill,  which  does  not  confer  upon  us  any  rights  which  we 
do  not  now  possess,  but  which  in  its  effect  attempts  to  restrict 
our  present  rights,  to  prevent  us  from  being  deprived  of  prop- 
erty, without  just  compensation. 

CANADIAN    LEGISLATION. 

The  Dominion  of  £*anada,  containing  a  very  large  railway 
mileage  for  its  population,  embracing  continental  lines,  has, 
through  its  parliament,  recently  passed  a  most  comprehensive 
act  for  the  regulation  of  railways. 

This  act  was  passed  October  34,  1903,  and  was  further 
strengthened  by  the  act  of  August  10,  1904.  Copies  of  these 
Canadian  laws  are  contained  in  Volume  5  of  Hearings  Before 
the  Senate  Committee  of  the  United  States  on  Interstate  Com- 
merce, 1905. 

We  do  not  find  in  this  act  any  loose  or  ambiguous  expres- 
sions, which  may  be-  resolved  against  the  public  control  of 
Canadian  railways,  nor  do  we  find  in  that  splendid  act  that  the 
Dominion  of  Canada  has  pretended  to  confer  upon  its  judicial 
department  the  power  to  fix  and  determine  reasonable  railway 
rates. 

That  act  proceeds  along  the  lines  of  President  Eoosevelt's 
recommendations  to  our  Congress,  but  is  complete  and  com- 
prehensive in  all  its  provisions. 

The  Canadian  act  creates  a  Board  of  Eailway  Commission- 
ers for  Canada,  and  among  other  powers  conferred  upon  that 
Eailway  Commission  are: 

(1)  The  power  to  make  classifications,  general  or  special, 
of  commodities. 

(2)  To  disallow  any  tariff  established  by  any  railway,  which 
it  considers  unjust  or  unreasonable. 

(3)  To  approve  all  railway  tariffs,  and  until  so  approved,  or 
after  having  been  disapproved,  the  railways  are  prohibited  un- 
der penalties,  from  charging  any  tariff  at  all,  and  in  case  of 
violation  of  the  orders  of  the  Commissioners,  the  railways  are 
subject  to  treble  damages  and  costs  at  the  suit  of  individuals. 

(4)  To  adjust  the  rates  and  determine  the  proportion  of 
business  between  connecting  lines  on  through  transportation 
over  different  roads. 


99 

In  addition  to  the  powers  of  the  Canadian  Board  of  Eail- 
way  Commissioners  here  briefly  mentioned,  the  act  makes  full 
provision  in  regard  to  the  organization  of  railway  companies, 
and  the  issuance  of  capital  stock,  and  of  bonds  under  the  con- 
trol and  subject  to  the  approval  of  the  Commissioners,  and 
makes  full  provisions  regarding  stations  and  railway  crossings. 
In  short,  nothing  appears  to  be  omitted  to  secure  the  complete 
control  of  the  government  over  Canadian  railways  and  the  pro- 
tection of  the  public  rights 

If  we  in  the  United  States  are  unable  to  secure  the  passage 
of  a  law  authorizing  an  administrative  body  to  fix  a  reasonable 
rate  for  one  found  to  be,  upon  a  hearing,  unreasonable,  along 
the  lines  as  recommended  by  the  President,  or  as  contained  in 
the  Canadian  act,  it  would  be  vastly  preferable  to  pass  no 
further  laws  upon  the  subject,  and  to  rely  wholly  upon  the 
guaranties  of  the  Constitution  against  the  taking  of  property 
without  due  process  of  law,  or  without  compensation,  than  to 
have  our  rights  and  remedies  entangled  and  embarrassed  by 
the  passage  of  such  bills  as  are  endorsed  by  the  railways,  which 
they  now  proposed  to  urge  upon  Congress." 

ADDEESS,  BY  EDWAED  EOSEWATEE,  OF  OMAHA,  XEB. 

When  I  accepted  the  invitation  of  the  chairman  of  your 
Executive  Committee  to  address  this  Convention,  I  felt  highly 
honored,  because  it  afforded  me  an  opportunity  to  meet  the  pion- 
eers in  the  movement  for  the  government  regiilation  and  control 
of  railways. 

I  rejoice  at  the  positive  stand  that  has  been  taken  by  this 
Convention  to  uphold  the  hands  of  President  Eoosevelt.  Two 
weeks  ago  I  had  a  conference  with  the  President  on  this  very 
subject,  and  he  expressed  very  great  anxiety  that  this  Convention 
do  aright.  He  expressed  himself  as  thoroughly  convinced  that 
the  course  he  had  outlined  for  himself  was  in  the  interest  of  the 
American  people  and  he  proposed  to  stand  on  that  line  until  the 
object  for  which  we  are  all  battling  has  been  achieved. 

It  is  a  common  adage  that  those  whom  the  gods  wish  to 
destroy  they  first  make  mad,  and  it  does  seem  to  me  that  the 
railway  corporations  in  undertaking  to  pack  this  Convention  in 
order  to  break  it  up,  have  made  the  most  colossal  blunder  they 
have  ever  made  in  the  great  contest  that  has  been  going  on  for 
the  past  thirty  years. 

I  liave  been  through  this  conflict  since  its  inception,  and  I 
have  never  seen  them  commit  a  greater  blunder.  This  Conven- 
tion has  successfully  parried  the  blows  and  bluffs  of  the  Parry 
organization  and  it  is  capable  of  carrying  out  its  intention,  no 
matter  what   the   consequences   may   be.      Individually   or   col- 


100 

lectively,  we  may  draw  upon  ourselves  the  ill  will  and  enmity  of 
the  railroad  corporations,  but  I  feel  sure  the  time  will  come 
eventually  when  the  railroads  will  realize  that  they  have  been 
their  own  greatest  enemies  in  opposing  this  movement. 

They  hold  up  the  bugbear  of  government  ownership.  Their 
managers  try  to  frighten  their  employes  by  threats  of  wage  re- 
duction and  threaten  to  paralyze  commerce  by  the  withdrawal 
of  transportation  facilities.  But  they  are  operating  railroads  not 
as  a  matter  of  benevolence,  but  for  the  money  there  is  in  it. 
They  will  have  to  continue  to  pay  good  wages  so  long  as  good 
wages  prevail  in  America  and  they  are  going  to  furnish  facilities 
to  their  patrons  unless  they  want  to  bankrupt  themselves.  Presi- 
dent Eoosevelt  does  not  favor  government  ownership  of  railroads. 
Nobody  in  this  Convention,  so  far  as  I  know,  favors  government 
ownership  and  operation  of  railroads,  but  we  favor  the  super- 
vision and  regulation  of  the  railroads  of  the  United  States  by 
the  people,  who  delegated  their  sovereign  power  over  public  high- 
ways to  the  corporations  that  own  them. 

In  this  irrepressible  conflict  there  is  no  such  word  as  "Ee- 
treat."  The  contest  will  go  on  until  it  is  settled  right.  The 
President  has  simply  done  what  the  American  people  have  long 
wished  for.  It  is  not  a  question  affecting  shippers  merely.  Mil- 
lions of  other  people  are  vitally  interested  in  this  great  move- 
anent.  Every  man,  woman  and  child  in  this  country  is  interested 
in  it.  Above  all  things,  we  are  interested  in  the  maintenance  of 
popular  self-government  without  the  corrupting  intervention  of 
giant  corporations. 

Mr.  Parry  has  given  it  out  that  this  is  a  reactionary  move- 
ment toward  populism  and  free  silver.  Now,  so  far  as  I  am 
concerned,  I  have  ne^er  been  charged  with  being  partial  to  free 
silver,  but  I  want  to  remind  you  that  there  is  something  worse 
than  populism  and  that  is  railroad  rule.  We  of  Nebraska 
have  wrestled  with  it  for  twenty-five  or  thirty  years.  Back  in 
the  seventies  we  had  Jay  Gould  and  Sidney  Dillon,  then  presi- 
dent of  the  Union  Pacific,  come  to  the  state  capital  to  dominate 
a  Eepublican  state  convention,  a  large  majority  of  whose  dele- 
gates was  against  them  when  it  convened,  but  after  four  days 
of  siege  theyhad  to  capitulate  to  the  magnetic  influence  of  boodle. 
I  would  rather  submit  to  anything,  and  am  willing  even  to  be 
called  a  populist  and  advocate  of  free  silver  than  to  submit  to 
the  tyrannical  and  demoralizing  domination  of  railroads. 

We  arc  presumed  to  liavc  a  government  for  the  people,  by 
the  people,  but  popular  self  government  is  a  farce  so  long  as  the 
government  machinery  is  controlled  by  the  corporations.  It  is 
simply  a  providential  incident  that  the  White  House  is  occupied 
by  a  man  who  is  an  American  through  and  through.  He  is  of 
the  people  and  for  the  people,  and  we  have  it  in  our  power,  so 


101 

'       ?    ^  ^     >    t      ,  ■      > 

«   1       J        >     o  ,        ,  ■  ^  ,       ; 

long  as  we  have  him  in  the  White  Housej,*to  resist^the  pressure 
brought  by  giant  corporations.  "A  '     ^  :  •  '  .'  ,^^'  l'.  I 

The  railroad  managers  say  they  do  not  want  a  special  judicial ' 
tribunal  established  for  adjudicating  interstate  commerce  ques- 
tions, or  questions  that  come  before  the  Interstate  Commerce 
Commission.  What  do  the  railroad  magnates  want?  They  are 
satisfied  with  most  of  the  gentlemen  who  now  occupy  the  federal 
bench,  because  they  have  graduated  from  railroad  headquarters. 
What  the  American  people  must  have  is  a  tribunal  that  will  have 
exclusive  jurisdiction  over  interstate  commerce  litigation,  so  that 
a  uniform  code  may  be  established. 

ISTot  many  years  ago,  for  example,  we  had  a  decision  from  a 
federal  judge  in  our  own  state  declaring  an  act  of  the  legislature 
regulating  stock  yards  charges  as  unconstitutional,  while  in  Kan- 
sas the  same  law  was  declared  constitutional  by  another  federal 
judge.  Thus  we  are  driven  from  pillar  to  post.  You  have  to  go 
to  the  lowest  federal  court,  and  if  you  are  beaten  you  have  to  go 
to  the  court  of  appeals  and  in  the  course  of  years  you  may  reach 
a  decision  from  the  highest  court  in  the  land. 

What  we  want  is  to  give  the  Interstate  Commerce  Commis- 
sion the  power  tTiat  was  intended  to  be  given  to  it  when  the  law 
creating  the  Commission  was  first  enacted.  I  was  before  the 
committees  of  both  houses  of  Congress  in  1885  and  1886,  urging 
the  enactment  of  an  interstate  commerce  law,  but  we  have  only 
had  partial  success  by  reason  of  the  facts  that  everything  has  been 
done  to  prevent  the  Commission  from  carrying  out  in  good  faith 
the  object  for  which  the  law  was  enacted. 

I  do  not  pretend  to  represent  any  organization,  but  I  think 
I  can  safely  speak  for  all  the  people  of  Nebraska,  barring  a  few 
beneficiaries  of  the  railroads  and  their  officials,  when  I  say  that 
they  are  with  you  in  this  movement.  But  you  must  organize  as 
the  railroads  are  organizing.  You  must  meet  their  champions 
face  to  face.  You  must  go  to  the  school  districts,  go  to  any  and 
every  place  wliere  they  are  going,  and  fight  them  on  their  own 
grounds.  Individual  work  will  not  accomplish  the  result,  but 
united  organization  is  what  is  required  to  win  the  battle. 

They  talk  about  populism  being  generated  by  this  movement. 
Only  about  eight  years  ago  Marvin  Hughitt,  president  of  the 
Northwestern  railroad,  declared  in  my  presence  that  populism 
in  Nebraska  had  been  fermented  more  by  the  policy  pursued  by 
another  competing  railroad  manager  than  by  any  other  cause 
and  all  causes  combined.  Wliat  caused  the  populistic  uprising? 
The  persistent  efl'orts  of  railroad  managers  to  control  the  nomi- 
nation of  every  public  offkial  from  constable  up  to  governor  and 
from  governor  to  senator,  and  they  never  will  let  go  until  they 
are  compelled  to  do  so  by  the  tidal  wave  of  popular  sentiment. 
There  is  another  issue  that  must  be  met  incidentally  and  that  is 


102 

tHe  election  of  the..  United  States  senators  by  the  people  of  he 
^Vhififd  States.     . 

'  For  more  than  a  quarter  of  a  centnry  the  demand  for  inter- 
state commerce  regulation  laws  has  been  imperative.  The  arbi- 
trary pxnctions  and  uninst  discrimination  to  which  shippers  and 
localities  were  subjected  by  corporations  that  control  the  modern 
highways  of  commerce  had  created  the  profound  popular  resent- 
ment that  took  shape  in  the  enactment  of  the  so-called  "Granger 
laws"  by  the  embattled  farmers  of  the  west  and  northwest. 

State  supervision  and  regulation  of  railroads,  however,  was 
found  inadequate  to  remedy  the  abuses  incident  to  interstate 
traffic.  When  the  interstate  commerce  act  was  pending  in  Con- 
gress, the  contention  of  the  railroad  attorneys  was  that  railroads 
were  private  enterprises,  that  differed  in  no  respect  from  any 
mercantile  investment,  and  were  no  more  subject  to  regulation 
by  Congress  than  would  be  a  hardware  or  grocery  store  or  a 
newspaper. 

It  has  taken  twenty  years  to  convince  the  owners  and  mana- 
gers of  the  railways  that  railroads  are  public  highways  and  sub- 
ject at  all  times  to  supervision  and  reasonable  regulation  by  the 
national  legislature,  just  as  they  are  and  have  been  subject  to 
supervision  and  regulation  directly  and  indirectly  by  the  states. 
But  railroad  presidents  and  railroad  attorneys  still  insist  that 
while  Congress  may  exercise  supervisory  authority  by  prohibiting 
discrimination  in  every  shape  and  form,  it  cannot  delegate  to 
any  commission  or  administrative  body  the  power  to  lower  or 
raise  any  rate  a  railroad  traffic  manager  may  see  fit  to  establish. 

This  is  really  the  core  of  the  contention  between  President 
Eoosevelt  and  the  railroads.  The  president's  position  is  in  favor 
of  enlarging  the  powers  of  the  Interstate  Commerce  Commission 
to  the  extent  that  it  shall  have  the  authority,  upon  complaint 
that  any  specific  transportation  rate  is  excessive,  to  investigate 
the  complaint,  and  in  case  the  rate  is  found  to  be  excessive,  to 
declare  the  rate  unreasonable  and  substitute  therefor  a  rate  which 
it  deems  just  and  equitable.  To  combat  that  position  tlie  rail- 
roads are  now  using  every  ingenious  argument  and  subtle  soph- 
istry which  can  be  evolved  from  the  fertile  brains  of  the  brainiest 
lawyers,  college  professors  and  editors  that  the  railroads  are  able 
either  to  hire  by  the  year  or  retain  or  subsidize  for  the  emergency. 

It  would  be  impossible  within  the  time  allotted  to  me  to  dissect 
every  one  of  the  numerous  plausible  and  puerile  objections  raised 
against  President  Eoosevelt's  plan  of  railway  regulation.  I  have 
taken  pains  to  read  fully  two  dozen  pamphlets  and  half  a  dozen 
books  that  have  been  emitted  by  railroad  presidents,  railroad  at- 
torneys and  railroad  scribes  in  opposition  to  the  Roosevelt  plan; 
and  I  have  also  read  a  great  part  of  the  testimony  taken  before 
the  Senate  Interstate  Commerce  Committee  last  spring.     These 


103 

variegated  argaiments  have  impelled  me  to  ask,  in  all  seriousness, 
wli)'  the  railroad  magnates  and  tlieir  retainers  have  not  lield  a 
convention,  or  at  least  a  conference  among  themselves,  so  that 
they  conld  agree  upon  a  specific  line  of  attack,  instead  of  scatter- 
ing their  shot  and  perforating  their  own  armors. 

Samuel  Spencer,  president  of  the  Southern  railwa}^  and  fore- 
most champion  in  the  let-alone  policy,  in  his  special  brief  to  the 
Committee  of  Interstate  and  Foreign  Commerce,  of  the  House 
of  Eepresentatives.  declares  that  there  is  nothing  in  the  present 
condition  warranting  any  action  of  Congress  that  would  confer 
the  rate  making  power  upon  the  Interstate  Commerce  Com- 
mission. In  Mr.  Spencer's  mind's  eye  it  is  clear  that  the  pro- 
posed changes  are  not  judicious  as  a  fiiture  system,  and  that  they 
are  not  warranted  by  the  constitution  of  the  United  States  and 
would  not  be  likely  to  accomplish  the  desired  results.  To  prove 
the  reasonableness  of  existing  rates,  Mr.  Spencer  quotes  from  the 
report  of  the  Interstate  Commerce  Commission  for  1893  and 
189-1,  in  which  it  expresses  satisfaction  A^ath  the  material  reduc- 
tion that  has  been  made  in  freight  rates  within  the  ten  preced- 
ing years.  Mr.  Spencer  seems  loath  to  quote  the  recent  reports 
of  the  Commission  which  show  that  a  material  increase  of  rates 
has  taken  place  within  the  past  three  years  by  changes  of  classi- 
fication. According  to  Mr.  Spencer,  the  matter  of  alleged  pref- 
erences between  localities  and  classes  of  traffic  is  largely  exag- 
gerated. Such  claims,  he  says,  will  always  exist,  and  the  present 
statute  furnishes  ample  means  of  dealing  with  them. 

We  are  further  reminded  by  Mr.  Spencer  that  in  states  where 
railroad  commissions  have  power  over  future  rates  against  all 
alleged  discrimination  betw^een  locality  and  classes  of  traffic,  com- 
plaints are  as  frequent  and  acute  as  ever.  Like  all  commercial 
questions,  says  he,  these  matters  are  best  settled  between  the 
parties.  In  this  respect  Mr.  Spencer  evidently  has  in  his  mind's 
eye  the  settlement  between  the  lamb  and  the  lion,  with  the  lamb 
inside  of  the  royal  beast. 

To  clinch  his  argument  that  the  proposed  amendment  of  the 
Interstate  Commerce  law  is  pernicious,  Mr.  Spencer  points  to 
the  fact  that  ninety-three  per  cent,  of  the  decisions  of  the  Com- 
mission, which  were  passed  upon  by  the  courts,  were  held  to  have 
been  erroneous.  It  is  impossible  to  foretell  what  havoc  would 
follow  from  the  exercise  of  such  powers  by  the  Commission.  Mr. 
Spencer  forgets,  however,  that  out  of  every  hundred  complaints 
made  before  the  Commission  ninety  were  recognized  as  just  by 
the  railroads  and  settled  amicably,  of  the  other  ten  appealed  to 
the  courts  by  the  railroads  two  were  decided  to  have  been  well 
founded  and  the  finding  of  the  Commission  sustained,  while 
the  remaining  eight  were  found  to  be  incorrect,  and  these  eight 
were  appealed  by  the  railroads  because  they  were  the  weakest 


104 

cases.  What  terrible  havoc  would  be  wrought  by  the  Commission 
if  it  were  to  adjudicate  correctly  ninety-two  times  out  of  a  hun- 
dred if  it  shall  be  given  the  power  to  reduce  rates,  cannot  be 
foretold  by  anybody  except  an  oracle  of  Spencerian  magnitude. 
In  conclusion  Mr.  Spencer  would  give  as  the  proper  remedy  for 
all  complaints  against  railways,  "the  promotion  of  better  rela- 
tions between  railroads  and  their  patrons  and  the  enforcement 
of  the  statute  laws  in  the  courts." 

Stuyvesant  Fish,  president  of  the  Illinois  Central  railroad, 
while  discussing  the  question  of  railroad  rates  before  the  special 
committee  on  interstate  commerce  said: 

''There  is  not  to  my  knowledge  any  general  complaint  nor 
has  there  been  for  a  long  time  any  complaint  with  regard  to 
rates  that  are  excessive.  What  agitation  has  been  had  on  that 
subject  is  facetious  and  fictitious  absolutely.  It  has  been  pro- 
moted by  interested  parties,  and  it  is  very  easy  to  see  who  those 
interested  parties  are,  aside  from  the  Commission." 

"Take  the  case  of  a  middle-man — and  all  shippers  are  middle- 
men— who  has  what  he  claims  is  an  over-charge.  He  makes  bis 
claim  against  the  railroad  company ;  at  the  same  time  he  sells  his 
goods,  adds  the  amount  of  his  freight  bill  upon  the  selling  price 
of  his  goods ;  that  combined  amount  is  passed  on  to  the  wholesale 
merchant,  and  then  it  is  passed  on  (with  his  profit  added)  to  the 
retailer,  and  from  the  retailer  with  his  profits  added,  it  is  passed 
on  to  the  final  consumer.  The  fellow  who  eats  the  loaf  of  bread 
made  from  the  flour  manufactured  from  the  wheat  is  the  fellow 
who  pays  the  unjust  charge  that  has  been  made  for  the  carriage 
of  wheat  from  South  Dakota  to  Pillsbury's  mill  at  Minneapolis ; 
but  who  ever  heard  of  one  of  these  middlemen,  when  he  recovers 
the  amount  of  his  overcharge,  returning  one  dollar  of  it  to  the 
fellow  to  whom  lie  sold  the  flour  or  to  the  man  who  ate  the  bread 
made  from  the  flour?" 

This  is  precisely  where  the  shoe  pinches.  If  the  railroads 
have  their  way  the  Commission  will  not  be  empowered  to  enforce 
its  orders  where  it  finds  a  rate  excessive,  but  its  decision  must 
be  reviewed  first  by  the  courts  and  it  may  take  from  two  to  five 
3'ears  before  the  courts  render  a  final  decision.  In  the  meantime, 
what  becomes  of  the  fellow  who  ate  the  bread  made  from  flour 
that  paid  the  excessive  rate  charged  to  the  middlemen,  the  whole- 
sale and  retail  merchants  who  added  the  excessive  freight  rate 
to  the  cost  of  the  flour?  If  the  plan  proposed  by  President 
Roosevelt  that  an  excessive  charge  shall  be  reduced  by  the  Com- 
mission and  the  new  rate  shall  immediately  go  into  effect,  the 
middlemen  will  not  be  compelled  to  pay  the  excessive  charge  and 
the  man  who  eats  the  bread  will  have  the  benefit  of  the  reduction. 

To  this  argument  Mr.  Fish  demurs  by  saying  that  "it  is  not 
just  to  the  railroad  companies  to  hale  them  into  a  special  court. 


105 

where  other  citizens  and  taxpayers  are  not  taken.  Under  the 
present  scheme  the  Interstate  Commerce  Commission  becomes  a 
prosecuting  officer  who  investigates,  then  it  becomes  the  grand 
jury,  to  whom  the  presentment  is  made  and  then  comes  the 
court  of  the  first  instance  and  its  findings  is  intended  to  be 
prima  facia  evidence  that  would  not  be  tolerated  in  any  other 
business  in  any  other  land." 

Mr.  Fish  does  not  seem  to  comprehend  that  corporations  act- 
ing as  common  carriers  are  not  on  the  same  plane  as  other  citi- 
zens and  taxpayers.  He  does  not  seem  to  concede  that  it  is  much 
more  unjust  and  iniquitous  to  allow  the  traffic  managers  to  levy 
tribute  upon  the  commerce  of  the  country  without  let  or  hin- 
drance. In  their  very  nature  railroads  are  monopolies  at  all  but 
competitive  points,  and  inasmuch  as  rates  at  competitive  points 
are  nearly  always  agreed  upon  by  the  traffic  managers,  the  powers 
arbitrarily  exercised  by  railroad  rate  fixers  are  frequently  oppres- 
sive, if  not  unbearable. 

Vice  President  Schoonmaker,  of  the  Erie  railroad,  who  ap- 
peared before  the  Senate  Committee  on  Commerce  to  remonstrate 
against  the  proposed  legislation,  said  that  to  further  empower 
the  Interstate  Commerce  Commission  and  give  it  the  right  to 
adjust  freight  rates  would  seriously  affect  the  present  friendly 
relations  between  the  railroads  and  the  shippers  and  prove  disas- 
trous to  both.  Other  railway  managers  go  still  further  and  de- 
nounce the  entire  scheme  of  railroad  rate  regulation  by  Congress 
or  by  a  Commission  as  revolutionary  and  confiscatory. 

The  views  expressed  by  these  remonstrants  seem  to  be  rad- 
ically at  variance  with  the  views  entertained  by  President  A.  B. 
Stickney,  of  the  Chicago  Great  Western  railroad. 

Mr.  Stickney  goes  further  than  President  Koosevelt  or  any 
other  advocate  of  railway  regulation.  President  Eoosevelt  only 
wants  to  confer  the  power  upon  the  Interstate  Commerce  Com- 
mission to  investigate  complaints  about  alleged  excessive  and  dis- 
criminating rates,  and  if,  after  a  full  hearing,  the  complaint  is 
found  just,  to  declare  the  rate  unreasonable  and  fix  a  lower  rate, 
to  take  effect  within  thirty  days  and  stand  until  set  aside  by  the 
courts.  Mr.  Stickney  wants  the  rate  making  power  conferred 
upon  the  Commission,  with  authority  to  make  complete  schedules 
without  complaint.  In  his  testimony  before  the  Senate  Commit- 
tee on  Commerce  last  spring  he  declared :  "In  considering  this 
matter,  it  should  be  understood  that  the  Commission  would  not 
make  a  separate  schedule  for  each  railway.  The  practice  of  each 
company  to  make  its  own  schedules  is  the  chief  cause  of  the 
present  confusion  in  interstate  rates,  because  there  are  as  many 
notions  upon  the  details  of  a  schedule  as  there  as  men  engaged 
in  making  the  schedules.  The  evident  advantage  of  only  one 
schedule  to  be  consulted  by  shippers  and  traffic  officials,  in  order 


106 

to  ascertain  any  desired  rate,  instead  of  having  to  consult  the 
thousands  of  separate  schedules  which  now  exist,  would  be  one 
of  the  greatest  benefits  which  it  is  possible  for  any  legislation  to 
confer  either  upon  the  companies  or  the  public.  The  practical 
duties  of  the  Commission  in  this  regard  would  be  to  line  up  all 
existing  rates  to  the  best  of  its  ability,  reduce  those  that  seemed 
too  high  and  make  compensation  for  such  reductions  by  increas- 
ing those  which  seemed  too  low.  In  those  duties  they  would  be 
assisted  by  the  argument  of  the  traffic  officials  of  the  companies 
and  by  the  arguments  of  the  shippers  and  the  Commission  would 
be  the  arbitrators.  It  is  not  to  be  supposed  that  in  this  way  or 
in  any  other  way  a  schedule  would  be  produced  which  would  be 
entirely  satisfactory  to  everybody.  Infinite  wisdom  sitting  as  an 
arbitrator  could  not  accomplish  such  a  task.  The  Commission, 
representing  the  sovereignty,  with  power  to  enforce  its  decisions, 
would  be  most  disinterested,  and  at  the  same  time  satisfactory 
arbitrator  which  is  possible." 

President  Stickney  also  takes  issue  with  other  railway  mana- 
gers who  contend  that  it  requires  expert  knowledge  in  making 
such  a  schedule.  This  is  also  a  point  which  is  strenuously  urged 
against  conferring  the  rate  making  authority  upon  the  Commis- 
sion at  this  time.  The  assumption  seems  to  be  that  there  are 
only  a  few  men  who  possess  the  exact  knowledge  required,  pre- 
sumably owing  to  the  relations  of  supply  and  demand ;  such  exact 
knowledge  can  only  be  obtained  by  paying  extraordinary  salaries, 
far  in  excess  of  the  salaries  which  Congress  would  be  willing  to 
provide. 

"I  but  quote  the  language  of  a  high  authority,"  declared  Mr. 
Stickney,  'Vlien  I  say  that  prior  to  the  injunctions  of  the  courts 
against  paying  rebates  it  was  understood  among  business  men 
that  schedules  were  made  for  smaller  shippers  and  those  un- 
sophisticated enough  to  pay  the  established  rates.  All  the  large 
shippers  of  freight  had  their  high  salaried  traffic  directors  as 
well  as  the  railroads  and  the  rates  which  such  shippers  paid 
were  not  determined  by  the  schedule,  but  bargaining  between 
the  high  salaried  traffic  directors  of  the  shippers  and  the  high 
salaried  traffic  directors  of  the  company." 

*********** 

That  it  does  not  require  high  priced,  exact  knowledge  to 
make  a  schedule  of  square  rule  rates  is  conclusively  proven  by 
the  fact  that  fourteen  years  ago  the  Railway  Commission  of  Iowa, 
consisting  of  unskilled  men,  each  drawing  a  salary  of  about 
$3,000  per  annum,  in  a  few  months  time,  mostly  in  hearing  the 
protests  of  the  railway  company,  made  a  square  rule  schedule  of 
rates  for  Iowa;  and  in  the  same  year  tbe  Commissioners  of 
Illinois,  composed  also  of  unskilled  men,  made  a  square  rule 


107 

schedule  of  state  rates  for  Illinois,  both  of  which  schedules  have 
been  used  during  those  years  and  pfactically  without  change. 

Here  is  an  example  of  only  one  schedule  of  rates  made  by 
state  commissioners,  covering  two  great  states,  having  more  junc- 
tions and  competitive  points  than  any  other  equal  area  in  the 
world,  which  has  been  satisfactory  and  without  change  for  more 
than  fourteen  consecutive  years,  while  on  the  other  hand  the 
interstate  schedules  made  by  traffic  experts,  under  the  stress  of 
competition  and  the  desire  on  the  part  of  each  to  gain  some 
advantage  over  the  other  which  affected  the  interstate  traffic  of 
the  same  two  states,  have  been  changed  during  the  same  time  by 
filing  with  the  Interstate  Commerce  Commission  probably  not 
less  than  8,000  or  10,000  schedules.  The  superiority  of  the 
Commissioners'  schedules  is  not  alone  in  the  matter  of  stability. 
The  schedules  made  by  the  Commissioners  are  in  such  form  that 
a  man  of  ordinary  understanding,  by  inspection  of  the  schedules, 
can  determine  for  himself  any  rate  he  may  desire.  On  the  other 
hand,  the  interstate  schedules  made  by  the  traffic  officers  are  in 
such  form  and  fashion  that  no  ordinary  man  can  by  inspection 
ascertain  any  rate.  Based  on  the  experience  of  Iowa  and  Illinois, 
it  would  seem  proven  that  the  making  of  a  schediile  of  rates  is 
a  task  which  the  Commission  can  thoroughly  accomplish.  This 
is  the  testimony  of  one  of  the  most  experienced  railway  managers 
in  the  great  west. 

Passing  from  railroad  presidents  to  railroad  attorneys,  Mr. 
Walker  D.  Hines,  general  attorney  of  the  Louisville  &  Nashville 
railroad,  declares  that  the  Eoosevelt  regulation  plan  gives  the 
Commission  the  general  rate  making  power  just  as  fully,  for 
practical  purposes,  and  just  as  free  from  judicial  review  as  it  is 
possible  to  imagine.  In  point  of  fact,  the  only  thing  more  radical 
than  this  bill  that  could  be  enacted  would  be  to  provide  for  gov- 
ernment ownership  of  the  railroads.  Mr.  Hines  feels  sure  that 
the  owners  of  the  railroads  would  so  far  as  their  pecuniary  inter- 
ests in  the  railroads  is  concerned,  welcome  government  owner- 
ship with  the  resulting  substitution  of  government  securities  in 
return  for  their  present  railroad  holdings  at  a  fair  valuation,  in 
place  of  continuing  to  hold  their  property,  subject  to  the  regula- 
tion of  the  Interstate  Commerce  Commission  taking  effect  and 
prior  to  any  judicial  review. 

I  feel  sure  no  national  advocate  of  railroad  regulation  will 
disagree  with  Mr.  Hines.  With  the  speculative  features  elimi- 
nated from  the  capitalization,  construction  and  operation  of  the 
railroads,  with  government  supervision  that  would  stop  profit 
sharing  with  side  partners  through  rebates,  private  car  lines  and 
sleeping  car  lines,  there  would  be  no  incentive  for  the  captains 
of  industry  to  continue  in  the  railroad  business.  They  would 
doubtless   cheerfully  exchange  their   securities   for  government 


108 

bonds  and  employ  their  capital  and  genius  in  enterprises  that 
offer  opportunity  for  unrestricted  high  finance. 

Discussing  the  question  of  rebates,  Mr.  Hines  says:  "This 
bill,  by  authorizing  the  Commission  to  prescribe  specific  rates, 
which  cannot  be  departed  from  without  application  to  the  Com- 
mission, is  going  to  encourage  secret  rebates,  because  when  the 
commercial  conditions  necessitate  a  speedy  reduction  in  specific 
rates  established  by  the  Commission,  it  will  be  impossible  to  get 
the  necessary  instruction  and  action  by  the  Commission  in  time 
to  meet  the  exigencies  of  the  occasion,  and  this  condition  will 
constitute  an  almost  overwhelming  temptation  to  the  railroads 
to  violate  the  mandate  of  the  law,  that  the  rate  fixed  by  the 
Commission  must  be  observed  until  changed  by  the  Commission 
and  to  make  secret  reductions  from  such  rate  for  the  purpose  of 
meeting  the  immediate  necessities  of  commerce." 

Mr.  Hines  is  evidently  familiar  with  the  natural  propensities 
of  the  average  railroad  traffic  manager.  He  knows  that  he  cannot 
withstand  the  temptation  to  give  rebates  to  friendly  Indians  of 
the  commercial  clubs,  just  as  a  matter  of  habit.  Why  the  rail- 
roads should  object  to  a  law  that  will  enable  them  to  excuse 
rebates  on  the  ground  of  inability  to  resist  temptation  is  inex- 
plicable. Including  his  analytical  pamphlet,  Mr.  Hines  declares 
the  present  bill  simply  meant  to  throw  aside  the  reasonable,  well 
defined  system  which  now  exists,  and  which  is  not  shown  to  be 
Insufficient,  and  to  substitute  for  it  a  series  of  the  most  remark- 
able innovations,  many  and  perhaps  all  of  which  will  call  for 
judicial  construction,  and  to  put  the  whole  question  of  regulat- 
ing interstate  commerce  into  uncertainty  for  another  series  of 
years,  pending  final  judicial  determination  of  the  status  of  the 
new  legislation. 

Such  a  state  of  uncertainty  was,  of  course,  to  have  been  ex- 
pected. It  was  fore-ordained,  but,  inasmuch  as  the  railroads  have 
their  lawyers  by  the  year,  the  amounts  set  aside  for  their  legal 
departments  will  not  have  to  be  materially  increased. 

Mr.  Victor  Morawetz,  general  counsel  of  the  Atchison, 
Topeka  &  Santa  Fe  Eailroad  company,  in  testifying  before  the 
Committee  on  Interstate-  Commerce  of  the  United  States  Senate, 
declared  that  the  proposed  legislation  would  put  an  end  to 
further  extensions,  improvements  and  additions  on  his  railroad 
and  all  other  railroads,  but  in  this  respect  his  prediction  is  simply 
a  repetition  of  those  made  by  railway  attorneys  before  the  com- 
mittee of  Congress  who  opposed  the  enactment  of  tlie  first  inter- 
state commerce  law  twenty  years  ago. 

At  no  time  in  the  history  of  railroads  has  there  been  greater 
activity  in  railway  extension  and  railway  betterment  than  at  this 
time.  Many  of  the  trunk  lines  are  being  doubled-tracked  and 
even  quadruple-tracked,  and  thousands  of  miles  of  branch  lines 


109 

are  now  under  construction  or  contracted  for  to  be  constructed 
during  the  coming  year.  The  railway  magnates  either  feel  con- 
fident of  their  ability  to  defeat  all  rate  regulation  legislation  or 
iheir  pretended  fears  of  the  disastrous  effect  of  the  proposed 
legislation  are  a  mere  bluff. 

Hon.  Eichard  Olney,  the  most  eminent  and  learned  corpora- 
tion scribe  in  the  United  States,  has  favored  the  American  people 
with  the  most  subtle  and  most  confusing  dissertation  on  the  legal 
aspect  of  railroad  rate  making  by  Congress  in  the  October  num- 
ber of  the  North  American  Eeview,  in  which  he  attempts  to 
controvert  the  published  opinion  of  the  attorney  general  of  the 
United  States,  in  support  of  the  proposed  extension  of  the 
powers  of  the  Interstate  Commerce  Commission.  Mr.  Olney 
concedes  by  implication  the  power  of  Congress  to  regulate  inter- 
state railway  transportation,  but  he  asserts  that  if  Congress  is 
authorized  to  prescribe  such  rates,  it  must  do  so  itself,  by  positive 
and  explicit  enactment.  It  is  passing  strange,  however,  that  the 
Supreme  Court  of  the  United  States  should  have  declared  valid 
the  granger  laws  of  Wisconsin  and  the  warehouse  commission 
laws  of  Illinois,  notwithstanding  the  fact  that  the  powers  of 
rate  regulation  were  delegated  by  the  legislature  of  those  states 
to  an  elective  or  appointive  commission. 

Mr.  Olney  dwells  with  unction  upon  the  point  that  railroad 
rate  making  requires  expert  and  scientific  ability  of  a  high  order 
and  cannot  be  intelligently  done  by  a  legislative  body,  but  how 
much  more  intelligently  can  it  be  done  by  a  body  of  jurists,  who 
have  no  opportunity  of  familiarizing  themselves  with  scientific 
railroad  rate  making? 

Mr.  Olney  would  have  us  believe  that  Congress  can  no  more 
grant  legislative  power  to  a  Commission  than  to  the  President, 
and  can  no  more  delegate  to  any  person  or  trilmnal  the  power 
to  determine  reasonable  rates  of  transportation  than  the  power 
to  determine  reasonable  duties  on  imports,  and  in  which  case, 
while  it  may  authorize  the  Commission  to  work  out  details,  must 
itself  determine  the  standard  of  reasonableness.  Inasmuch  as 
Congress  cannot  possibly  be  in  session  all  the  year  around,  it 
could  not  within  the  nature  of  things  attempt  to  regulate  railway 
rates  any  more  than  the  Supreme  Court  of  the  United  States. 
If  it  cannot  delegate  that  power  to  an  administrative  body,  it 
must  of  necessity  leave  that  power  to  be  exercised  by  the  railroads 
without  restriction,  and  that  is  really  what  Mr.  Olney  and  all  the 
corporation  scribes  so  zealously  wish  for. 

Mr.  Olney  imagines  that  lie  has  struck  a  sledge-hammer  blow 
at  railroad  regulation  when  he  asks,  "Can  such  a  power  in  Con- 
gress, as  the  right  to  dictate  rates  to  the  carriers  of  the  country, 
a  power  never  yet  exercised,  either  directly  or  indirectly,  through 
a  Commission,  be  justly  regarded  as  contemplated  by  the  consti- 


110 

tution."  Certainly  not.  The  constitution  makers  had  no  more 
intention  of  giving  Congress  or  any  Commission  the  power  of 
railroad  regulation  than  they  had  to  confer  upon  Congress  or 
upon  any  state  the  power  to  fix  telegraph  and  telephone  tolls,  or 
to  limit  the  speed  of  aiitomobiles. 

Continuing,  Mr.  OIney  says,  "It  is  expected,  therefore,  that 
railroad  rate  making  by  the  national  government  within  its 
sphere  will  l)e  supplemented  by  railroad  rate  making  by  the 
several  states  within  their  several  spheres." 

Precisely.  Eailroad  rate  making  by  the  several  states  has 
been  going  on  with  the  sanction  of  the  state  and  federal  courts 
for  more  than  twenty-five  years,  and  no  court  has  yet  pronounced 
it  unconstitutional.  Even  in  the  famous  Nebraska  maximum 
rate  case  the  Supreme  Court  of  the  United  States  affirmed  the 
right  to  establish  maximum  rates  1)y  law,  and  simply  declared 
the  rate  established  by  the  Nebraska  legislature  of  1893  unrea- 
sonable under  the  conditions  then  existing,  viz.,  tremendous 
shrinkage  in  the  volume  of  traffic  by  reason  of  general  business 
depression  and  successive  drouths. 

Mr.  Olney's  most  subtle  argument  against  national  railway 
regulation  is  that  it  would  be  in  violation  of  Article  I  of  the 
United  States  constitution,  which  reads  as  follows : 

"No  preference  shall  be  given  by  any  regulation  of  commerce 
or  revenue  to  the  ports  of  one  state  over  those  of  another." 

This  provision  is  tortured  by  Mr.  Olney  into  a  prohibition 
of  preferential  rates  for  transportation  by  railway  between  any 
of  the  ports  of  the  United  States.  In  other  words,  a  prohibition 
of  lower  railroad  rates  from  interior  points  to  any  of  the  ports 
on  the  Atlantic  sea  board  or  the  Mexican  gulf,  regardless  of 
distance. 

In  this  interpretation  of  the  intent  and  meaning  of  Article  I 
of  the  constitution,  Mr.  Olney  comes  into  violent  collision  with 
James  Madison,  one  of  the  framers  and  the  historian  of  the  con- 
stitution, who  declared  that  the  main  purpose  of  this  clause  was 
to  abolish  certain  intolerable  discriminations  in  the  nature  of 
regulations  imposed  by  the  states  upon  the  domestic  and  foreign 
commerce  of  the  country. 

Mr.  Olney's  contention  is  that  railroads  operated  by  private 
corporations  may  make  differentials  between  the  various  ports  so 
as  to  equalize  carriers'  charges  that  will  enable  the  producers  in 
the  interior  to  ship  their  products  to  the  best  port  by  the  shortest 
and  cheapest  route,  while  congressional  rate  making  would  event- 
ually result  in  the  adoption  of  a  mileage  basis  and  some  of  the 
ports  on  tlie  Atlantic  sea  board  would  be  injuriously  affected. 

This  is  simply  confusing  the  issue  in  order  to  justify  railroad 
discrimination  through  arbitrary  differentials.  Mr.  Olney's  con- 
tention is  tantamount  to  the  assertion  that  the  railroads  might 


Ill 

circumvent  the  constitutional  provision  against  discriminating 
between  ports  so  long  as  they  are  not  controlled  by  Congress,  but 
the  moment  they  are  so  controlled  the  equality  between  the  ports 
must  be  maintained. 

Perhaps  Mr.  Olney  is  not  aware  of  the  fact  that  bills  estab- ' 
lishing  a  free  port  at  Fort  Pond  Bay,  L.  I.,  were  introduced  in 
1894  in  the  Senate  by  Senator  Chandler  (senate  bill  No.  1980) 
and  again  by  Senator  Fry  in  1895  and  1896  (senate  bill  No. 
561),  and  also  in  the  House  by  Eepresentative  A.  C.  McCormick, 
house  bill  No.  3813).  These  bills  were  designed  to  establish 
an  international  clearing  house  at  Fort  Pond  Bay,  in  which 
goods  shipped  from  one  country  to  another  (not  in  the  United 
States),  could  be  landed  and  reshipped  to  foreign  countries  with- 
out the  payment  of  the  customs  duties  or  inspection  by  customs 
officials. 

The  Fort  Pond  Bay  free  port  was  designed  to  also  become  the 
terminus  of  the  shortest  steamship  line  between  the  United  States 
and  England  and  would  have  given  New  York  an  extraordinary 
advantage  over  other  ports  on  the  Atlantic  seaboard.  The  project 
was  financed  by  the  late  Austin  Corbin,  a  very  able  American 
financier,  and  it  stands  to  reason  that  Mr.  Corbin  would  not  have 
ventured  upon  the  enterprise  that  involved  an  outlay  of  many 
millions  without  consulting  eminent  constitutional  lawyers. 

Mr.  Corbin's  accidental  death  while  the  free  port  bills  were 
pending  in  Congress  frustrated  the  enterprise,  which  I  feel  sure 
will  be  revived  at  no  distant  day  by  the  capitalists  who  obtained 
control  of  the  Long  Island  railroad  and  acqiiired  title  to  his 
Fort  Pond  Bay  interests. 

"Transportation,"  says  the  Massachusetts  statesman,  "is  one 
branch  of  commerce  as  buying  and  selling  of  products  is  another. 
Both  may  l)e  regulated  by  the  national  government,  but  neither 
carried  on  by  it." 

As  a  matter  of  fact  railroads  have  been  constructed,  owned 
and  operated  by  the  several  states  and  the  United  States  govern- 
ment; and  this  relates  not  only  to  railroads  within  the  United 
States,  but  also  witliout.  The  United  States  at  present  owns  and 
operates  the  Panama  railroad  and  proposes  to  own  and  operate 
an  inter-oceanic  canal.  If  Congress  can  delegate  the  power  to 
operate  the  Panama  railroad  and  fix  the  charges  thereon  and  to 
construct  and  operate  the  Panama  canal  and  fix  charges  thereon 
to  a  Commission,  it  can  certainly  delegate  the  rate  making  power 
to  the  Interstate  Commerce  Commission. 

A  much  less  eminent  but  more  pretentious  champion  of  the 
let-alone  policy,  who  has  projected  himself  into  the  arena  as  a 
disinterested  guide,  philosopher  and  friend,  is  Hugo  R.  Myer, 
assistant  professor  of  political  economy  of  the  University  of  Chi- 
cago, who  voluntarily,  as  it  were,  invited  himself  before  the  Inter- 


112 

state  Commerce  Committee  of  the  Senate  to  enlighten  that  body 
with  regard  to  its  duties  in  the  present  emergency.  Professor 
Myer  has  also  supplemented  his  entirely  disinterested  efforts  to 
stem  the  popular  sentiment  in  favor  of  national  railway  super- 
vision and  regulation  by  a  book  which  is  being  widely  circulated 
regardless  of  expense  by  the  literary  bureau  of  the  railroads. 

Professor  Myer  institutes  invidious  comparisons  between  tlie 
government-owned  railroads  of  Germany,  Austria  and  France 
and  the  privately  owned  railroads  of  the  United  States,  but  he 
carefully  omits  comparisons  with  the  privately  owned  and  gov- 
ernment-regulated railroads  of  Great  Britain.  It  is  amusing  to 
note,  however,  that  his  expert  knowledge  of  railway  management 
and  railway  operation  in  Germany  was  derived  not  from  per- 
sonal observation  or  inquiry  abroad,  but  from  books  and  statis- 
tics. In  other  words,  Professor  Myer  did  not  come  in  contact 
with  the  shippers  and  producers  of  Germany  or  the  railroad  em- 
ployes, nor  does  he  take  into  account  tlie  fact  that  all  the 
European  railroads,  barring  Eussia,  would  be  counted  as  short- 
haul  lines  in  the  United  States,  while  his  comparison  of  European 
short-haul  tonnage  rates  is  made  with  the  long-haul  tonnage 
rates  in  America,  whereas  they  should  have  been  compared  with 
the  short-haul  rates  of  America,  which  are  two  and  three  times 
as  high  west  of  the  Mississippi,  at  least,  as  those  of  Germany, 
Prance,  Belgium,  Switzerland  or  Austria. 

Professor  Myer  also  seemed  to  be  oblivious  of  the  fact  that 
government  owned  railroads  of  Europe  carry  free  the  mails  and 
postal  packages,  the  munitions  of  war,  the  troops,  the  army  and 
navy  supplies  and  civil  officers  traveling  on  government  business, 
whereas  in  the  United  States  more  than  $40,000,000  are  paid 
to  the  railroads  for  carrying  the  mails  and  $100,000,000  at  least, 
paid  by  the  people  for  express  service,  which  in  Europe  is  car- 
ried as  part  of  the  mail  service  at  a  nominal  price,  and  besides 
this  the  United  States  pays  many  millions  for  the  transportation 
of  troops,  army,  navy  and  Indian  supplies,  and  transportation  of 
federal  employes  and  officials. 

But  there  are  none  so  blind  as  those  who  will  not  see,  and 
Professor  Myer  appears  to  be  afflicted  with  the  same  color-blind- 
ness that  distressingly  beclouds  the  visions  of  so  many  favored 
shippers,  railway  lawyers,  subsidized  editors  and  even  men  of  the 
cloth. 

STATEMENT  BY  HON.  WILLIAM  LARRABEE,  OF 
CLERMONT,  IOWA. 

The  following  extract  from  an  article  contributed  to  the 
Boston  Evening  Transcript  by  Governor  Larrabee,  which  ap- 
peared in  its  issue  of  February  18,  1905,  was  submitted : 


113 

"The  first  year  in  which  the  Interstate  Commerce  law  was  in 
force,  ending  June  30,  1888,  the  mileage  of  the  United  States, 
as  shown  by  Poor's  Manual,  was  154,376  miles,  and  the  gross 
earnings  were  $960,256,270.  This  income  afforded  ample  re- 
muneration for  the  capital  invested  and  for  the  expense  of  main- 
taining and  operating  the  roads.  Mr.  Poor,  who  has  long  been 
considered  high  authority  and  always  partial  to  railroads,  esti- 
mated that  the  average  cost  of  the  railroads  was  $30,000  per 
mile,  and  he  stated  that  with  the  water,  which  was  more  than 
fifty  per  cent,  of  the  amount,  taken  out  of  their  securities,  no 
better  paying  investment  could  be  found  in  this  country. 

It  is  important  to  notice  with'  care  the  movements  of  the 
business  from  that  time  under  the  Interstate  Commerce  law,  up 
to  the  decision  of  the  Supreme  Court  in  1897,  and  from  that 
date  to  1904. 

The  mileage  was  in  1888 154,276  miles 

In   1897 184,428  miles 

In   1904 209,002  miles 

An  increase  in  nine  years  from  1888  to  1897  of 30,152  miles 

In  seven  years  from  1897  to  1904 24,574  miles 


The  gross  earnings  in  1888  were $960,256,270 

In    1897 $1,122,089,773 

In    1904 $1,966,633,821 

The  net  earnings  in  1888  were $301,631,051 

In    1897 $369,565,009 

In    1904 $634,250,873 

The  increase  in  mileage  in  nine  years  from  1888  to  1897  was 

19.5  per  cent.,  and  for  seven  years  from  1897  to  1904  was  13.2 
per  cent.  The  increase  in  gross  earnings  in  nine  years  from  1888 
to  1897  was  16.8  per  cent.,  and  in  seven  years  from  1897  to  1904 
was  75.2  per  cent.  The  increase  in  net  earnings  in  1897  over 
1888  was  22.5  per  cent.,  and  in  1904  over  1897,  71.6  per  cent. 
The  increase  in  gross  earnings  in  1904  over  1888  was  114.8  per 
cent.,  the  increase  of  net  earnings  in  1904  over  1888  was  110.2 
per  cent.,  and  the  increase  of  mileage  in  1904  over  1888  was 
only  35.4  per  cent.  This  makes  the  remarkable  showing  that 
from  1888  to  1897  the  mileage  had  increased  19.5  per  cent., 
gross  earnings  16.8  per  cent.,  and  net  earnings  22.5  per  cent,  in 
nine  years,  while  after  the  decision  of  the  Supreme  Court  in 
1897,  the  increase  was  in  seven  years  to  1904  in  mileage  only 
13.2  per  cent.,  but  gross  earnings  75.2  per  cent,  and  net  earnings 

71.6  per  cent. 

Comparisons  of  the  business  of  a  few  of  the  companies  of  the 
year  1897  with  1904  will  illustrate  well  the  marvelous  increase 
in  railroad  incomes. 


114 

St.   Paul,  1897  1904 

Gross  earnings $30,486,769  $48,330,335 

Net  earnings   11,909,228  16,453,745 

Northwestern, 

Gross  earnings  30,977,243  58,131  363 

Net  earnings   11,038,422  17,644,555 

Illinois  Central, 

■   Gross  earnings 22,110,937  46,831,136 

Net  earnings   6,375,052  12,095,454 

Pennsylvania, 

Gross  earnings    64,223,113  122,626,419 

Net  earnings   20,147,778  35,922,330 

Baltimore  &  Ohio, 

Gross  earnings    25,582,122  65,071,081 

Net  earnings   5,570,028  20,136,707 

Southern  Railway, 

Gross  earnings    19,079,499  45,109,777 

Net  earnings   5,846,343  11,994,310 

Southern  Pacific, 

Gross  earnings 48,871,900  92,933,231 

Net  earnings   17,195,959  29,990,645 

Atchison, 

Gross  earnings   30,621,230  68,171,200 

Net  earnings    7,754,041  24,033,003 

A  EEBUTTAL  PLEA  ATTACKED. 

The  ratio  of  increase  of  income  was  greatly  in  excess  of  the 
increase  of  mileage.  During  this  period  large  sums  were  ex- 
pended from  their  earnings  in  improvements.  For  example,  the 
Chicago,  Milwaukee  &  St.  Paul  expended  $12,500,000  in  this 
way  and  reduced  its  fixed  charges  by  over  $1,-500,000  per  annum. 
These  figures  tell  the  story  of  the  effect  of  the  Interstate  Com- 
merce Commission's  being  shorn  of  its  powers,  more  forcefully 
than  language  could  otherwise  express. 

It  is  claimed  that  the  increase  of  wages  and  the  cost  of  ma- 
terial makes  it  necessary  to  increase  the  cost  of  transportation, 
but  the  facts  are  well  known  that  the  improvements  in  macliinery 
and  improved  economic  methods,  have  greatly  more  than  ofl'set 
the  increase  in  wages  and  cost  of  material,  and  that  as  the  volume 
of  business  increases  the  ratio  of  expense  decreases. 

A   REAL   BURDEN. 

If  there  are  good  reasons  for  this  constant  increase  in  the 
capatalization  of  the  railroads,  and  this  constant  increase  of  rates 
for  transportation.  Congress  should  not  interfere.  But  is  it 
reasonable  that  this  tax,  as  it  was  correctly  called  in  the  Cullom 
Committee  report  in  1886,  should  be  increased  from  year  to  year, 
without  giving  those  who  have  to  pay  it,  any  hearing  or  voice  in 
determining  what  it  should  be?  Banks  are  restricted  as  to  rates 
of  interest  they  may  charge.  Postal  rates  for  carrying  mail  and 
merchandise  are  fixed  by  law.    Rates  of  toll  are  fixed  by  law  for 


115 

ferries,  bridges,  turnpikes,  grain  elevators,  street  cars,  cabs, 
water,  gas,  and  other  public  utilities  ,and  all  agree  that  it  is 
neeessaTj. 

When  it  is  considered  that  this  tax  is  levied  upon  nearly  every 
article  that  is  produced  or  consumed,  and  more  exacting  and  far- 
reaching  than  any  war  tax  ever  had  in  this  country,  and  levied 
not  by  tlie  authority  of  the  Government,  but  levied  at  the  com- 
mand and  under  the  direction  of  perhaps  less  than  a  score  of 
irresponsible  persons,  who  are  self-appointed  for  terms  without 
any  limit  as  to  time,  and  are  not  under  bonds  and  not  even  under 
oatli  to  observe  the  laws  of  the  State  or  iSTation,  and  that  this 
tax  amounted  last  year  to  $1,966,633,821,  or  more  than  seven 
and  a  half  times  the  amount  collected  by  the  United  States  Gov- 
ernment from  customs,  or  nearly  tliree  times  as  much  as  the  total 
revenue  received  by  the  United  States  Government  from  all 
sources  for  the  same  period  of  time,  and  when  we  consider  how 
thoroughly  other  public  charges  are  hedged  about  by  careful  re- 
strictions and  limitations,  and  with  what  deliberation  tlie  amount 
to  be  collected  is  fixed  after  thorough  public  discussion  by  agents 
of  the  people,  selected  by  them  to  serve  only  for  short  periods, 
and  that  they  are  under  oath,  and  those  who  collect  and  disburse 
the  funds  are  imder  oath  and  bonds  for  the  faithful  performance 
of  their  duties,  is  it  not  astonishing  that  the  Congress  of  the 
United  States  should  permit  this  condition  of  things  to  exist  ? 

Consolidations  and  combinations  are  going  on  steadily,  and 
competition  is  more  and  more  eliminated  from  the  equation. 
There  is  no  law  or  means  to  prevent  the  total  mileage  of  the 
country  from  falling  into  the  hands  of  one  management.  In  fact, 
indications  point  to  such  results  in  the  near  future." 

SOME  EEFLECTIONS  AS  TO  PEESIDENT  EOOSE- 
VELT'S  EECOMMENDATIONS  FOE  GOVEENMEN- 
TAL  EEGULATION  OF  FEEIGHT  EATES  THEOUGH 
THE  ADMINISTEATIVE  AEM  OF  THE  GOVEEN- 
MENT  EATHEE  THAN  THEOUGH  THE  JU- 
DICIAEY. 

BY  SILAS    W.   GAIIDIXER.   OF   LAUREL.   :MISS. 

The  Interstate  Commerce  Law  Convention  is  the  outgrowth 
of  efforts  by  the  business  interests  of  the  United  States  to  im- 
press upon  Congress  the  extent  and  persistence  of  the  demand 
of  the  people  of  all  parts  of  the  country  for  legislation  outlined 
and  asked  for  by  the  President  in  his  last  annual  message  to 
■  Congress. 

He  asks  for  a  law  that  will  clothe  the  Interstate  Commerce 
Commission  with  power  to  investigate  any  rate  that  may  be 
complained  of  as  excessive  or  unjust,  and  if  said  rate  should  be 


found  to  be  unreasonable  or  unjust  to  substitute  a  rate  (a  maxi- 
mum rate  supposedly)  that  it  shall  adjudge  as  reasonable  and 
fair  to  both  the  shipper  and  to  the  railroad,  and  that  the  rate 
so  substituted  shall  go  into  effect  and  so  remain  unless  or  until 
reversed  by  a  competent  court  of  review. 

The  Interstate  Commerce  Law  Convention  is  now  gathered 
here  for  the  purpose  of  considering  ways  and  means  of  carry- 
ing out  and  having  enacted  into  law  the  aforesaid  suggestions 
of  the  President  as  to  the  placing  control  of  rate  making  un- 
der governmental  regulation.  The  Convention  is  not  called 
or  convened  to  devise  or  to  consider  any  other  plan  or  method 
of  dealing  with  the  subject  of  governmental  regulation  of  rail- 
roads or  of  rates. 

While  this  Convention  does  not  stand  for  any  particular  bill 
or  measure,  the  legislation  needed  to  meet  the  requiremnts  of 
present  conditions,  is  substantially  that  which  has  been  formu- 
lated in  a  modified  form  of  the  so-called  Esch-Townsend  bill. 

It  is  endorsed  by  the  President,  and  also  is  satisfactory  to 
the  Interstate  Commerce  Commission. 

Provide  that  the  rulings  and  orders  of  the  governmental  au- 
thority shall  promptly  go  into  effect  (within  a  reasonable  time, 
which  would  mean  simply  time  enough  to  prepare  and  issue  a 
new  rate  sheet).  This  will  prevent  the  years  of  litigation  that 
are  now  necessary  in  order  to  get  a  disputed  rate  question  set- 
tled. To  illustrate  this  point,  the  cattle  men  of  Texas  have 
been  contending  against  what  they  believe  to  be  an  excessive 
rate,  for  several  years.  The  Central  Yellow  Pine  Association 
has  been  litigating  against  an  advance  of  2  cents  per  100  pounds 
on  yellow  pine,  which  was  put  into  effect  April  15,  1903,  and 
the  end  of  the  case  is  not  yet  in  sight,  although  tens  of  thou- 
sands of  dollars  have  been  swallowed  up  in  expenses  of  litiga- 
tion. The  association  has  had  a  favorable  decision  by  the  In- 
terstate Commerce  Commission,  and  the  Georgia  lumbermen 
have  won  their  case  in  the  Federal  Court,  but  the  railroads  still 
continue  to  enforce  the  advanced  rate,  and  it  amounts  to  millions 
of  dollars  that  tb.e  railroads  are  gathering  in  of  tlie  shippers' 
money. 

The  railroad  people  and  those  who  are  allied  with  them  in 
opposition  to  any  sort  or  kind  of  government  regulation  that 
will  actually  regulate  are  pleased  to  sneer  at  the  proposed  bill, 
and  to  characterize  it  as  "confiscatory  legislation,'"  and  "com- 
mercial lynch  law,"  and  that  such  a  law  "would  result  in  slow 
paralysis  of  railway  initiation,"  etc.  Their  whole  campaign  has 
been  one  of  sophistry  and  misrepresentation. 

There  are  in  the  United  States  something  like  206,000  miles 
of  railroads,  of  which  mileage  about  125,000  miles,  over  one- 
half,  are  under  the  jurisdiction  of  state  laws  and  State  Com- 


iir 

missions,  as  to  their  powers  of  rate-making  within  the  borders 
of  tlie  respective  states.  Does  anyone  ever  hear  of  "confiscatory 
rates"  or  "commercial  lynch  laws"  in  these  states? 

It  is  simply  preposterous  and  those  who  make  these  claims 
and  charges  and  predict  the  direful  calamities  to  follow  any 
efforts  to  control  rate-making,  and  who  invent  the  sensational 
catch-phrases  above  quoted,  know  that  they  are  totally  misrepre- 
senting the  President  and  his  recommendations  for  govern- 
mental control  of  rates.  They  do  it  simply  to  befog  and  con- 
fuse the  situation  and  mislead  the  people.  They  know  that  in 
those  states  where  rates  are  controlled,  the  railroads  are  as  pros- 
perous as  are  the  railroads  in  the  country  at  large. 

They  also  know  that  neither  the  Esch-Townsend  l^ill,  nor 
any  other  bill  that  has  been  proposed,  contemplates  the  general 
overhauling  of  the  railroad  freight  schedules,  and  to  arbitrarily 
substitute  new  rates.  These  bills  assume  that  rates  generally 
are  fair  and  satisfactory.  It  is  only  when  rates  are  advanced 
or  complained  of  as  unjust  that  the  government  is  to  investi- 
gate and  decide  as  to  the  justness  of  the  challenged  rate. 

To  make  this  question  perfectly  clear  and  thus  emphasize 
the  seriousness  of  the  conditions  as  they  now  prevail,  let  us  for 
a  moment  suppose  that  conditions  were  just  the  reverse  of  what 
they  are.  Let  us  suppose  that  the  government  has  had  for 
a  generation  the  unquestioned  or  undisputed  right,  after  a  rate 
has  been  complained  of,  and  upon  investigation  found  to  be  ex- 
cessive and  imjust,  to  name  a  rate  that  it  considers  just  and 
fair  to  the  shipper  and  compensatory  to  the  railroad — a  maxi- 
mum rate. 

Let  us  now  suppose  that  the  railroads  should  ask  the  people 
and  Congress  to  abrogate  this  right  and  safeguard  for  the  people 
and  to  relegate  the  entire  rate-making  power  to  the  railroads 
without  recourse  or  appeal;  that  the  interests  of  the  people 
should  be  completely  turned  over,  body  and  soul,  to  the  tender 
mercies  of  the  railroads. 

Would  there  not  go  up  from  the  people  a  loud  cry  unto 
Jupiter  that  they  might  be  spared  from  so  calamitous  a  con- 
summation ? 

I  would  ask  in  all  candor,  is  there  a  Senator  or  a  Congress- 
man who  would  have  the  nerve,  the  temerity  or  the  audacity  to 
recommend  or  advocate  such  a  measure? 

And  yet  this  is  the  very  condition  the  people  are  now  in. 
The  railroads,  under  the  laws  as  they  now  stand,  are  the  sole 
rate-making  power  of  our  land.  The  courts  are  denied  jurisdic- 
tion to  interfere  in  behalf  of  the  people,  as  rates  once  promul- 
gated and  duly  published  become  the  legal  rates  from  which 
there  is  no  escape,  because  the  courts  have  no  power  or  autliority 


118 

to  say  what  is  a  fair  or  jnst  rate,  and  it  is  astounding  that  some 
of  our  law  makers  knowing  this  to  he  true  can  have  the  nerve, 
the  temerity  and  the  audacity  to  oppose  such  an  amendment  to 
our  laws  as  the  President  recommends,  and  it  is  passing  strange 
that  they  will  tolerate  the  assertions  of  railroad  managers  that 
this  proposed  measure  is  nothing  short  of  "Confiscatory  Legisla- 
tion" and  "Coinmercial  Lynch  Law." 

Let  it  he  remembered  that  under  the  laws  now  in  effect  the 
railroads  are  fully  protected  against  any  sort  of  confiscation. 
The  courts  accept  jurisdiction  and  will  always  be  ready  to 
abrogate  a  rate  that  is  manifestly  too  low,  or  confiscatory,  but 
they  cannot  on  the  other  hand,  protect  the  people  against  an 
excessive  or  unjust  rate,  because  the  rates  are  made  according 
to  law,  and  are  legal  rates,  although  they  may  be  extremely 
extortionate  and  even  confiscatory.  Any  rate  that  the  railroads 
may  choose  to  make  is  legal  if  it  is  duly  puhlished,  and  no  court 
can  set  it  aside  and  substitute  a  fair  rate.  It  can  only  he  done 
by  the  administrative  arm  of  the  government,  and  so  it  is  that 
while  the  railroads  may  confiscate  the  property  and  the  fortunes 
of  individuals  and  have  done  so  in  many  instances,  there  is  not 
at  present  any  legal  method  of  preventing  a  continuation  of 
such  conditions,  and  this  is  why  it  is  so  important  that  President 
Roosevelt's  recommendations  shall  at  the  coming  session  of 
Congress  be  enacted  into  law,  in  order  that  the  rulings  and 
orders  of  the  government  may  be  enforced  and  made  immediately 
effective. 

There  is  another  thing  that  we  should  remember  in  con- 
nection with  this  matter,  to-wit :  The  railroads  have  nothing  at 
stake,  and  therefore  nothing  to  lose  in  advancing  rates,  but  they 
have  millions  to  gain.  The  reason  is  that  if  the  people  fight 
against  the  advanced  rates  the  railroads  can  under  present  con- 
ditions keep  the  matter  in  the  courts  for  four  or  five  years  and 
all  the  time  continue  to  collect  the  advanced  rates,  and  at  the 
end  of  it,  all  that  can  be  done  is  to  order  the  railroads  to 
desist  from  anv  longer  charging  the  rate.  In  the  meantime 
the  railroads  have  gathered  in  millions  of  dollars  of  the  people's 
money  and  there  is  no  recourse  or  help  for  it.  This  is  clearly 
shown  in  the  cases  of  the  cattle  men  of  Texas  and  the  Central 
Yellow  Pine  Association  against  the  railroads  now  in  court. 
The  controversy  as  to  whether  the  Commission  should  name  a 
"maximum"  rate  or  a  "reasonable"  rate  is  not  at  all  relevant  to 
our  discussion  as  the  words  under  the  proposed  law  would  be 
considered  as  synonamous  terms.  As  before  stated,  the  object 
of  this  Convention  is  simply  to  devise  ways  and  means  to  secure 
legislation  along  the  lines  recommended  by  President  Eoosevelt. 


119 

By  motion  of  Judge  S.  H.  Cowan,  duly  seconded  and  adopted, 
the  name  of  W.  E.  Hughes,  of  Denver,  Col.,  was  added  to  the 
Executive  Committee,  as  a  sixteenth  member  thereof;  and  by 
motion  of  Mr.  E.  W.  Higbie,  the  Executive  Committee  was  made 
to  consist  of  seventeen  members,  and  Mr.  K.  H.  West,  of  Cin- 
cinnati, was  named  as  a  member  of  said  committee. 

Mr.  S.  H.  Dougherty  :  "I  hold  in  my  hand  a  telegram  from 
the  Business  League  and  Cotton  Exchange,  of  Houston,  Texas, 
extending  an  invitation  to  the  Interstate  Commerce  Law  Con- 
vention to  hold  its  next  annual  meeting  in  Houston." 

On  motion,  the  telegram  was  referred  to  the  Executive  Com- 
mittee. 

On  motion,  the  Convention  took  a  recess  until  2 :30  p.  m. 


FOUETH  SESSION. 

Chicago,  III.,  Oct.  27,  1905. 

The  fourth  session  of  the  Convention  was  called  to  order  at 

2  :45  p.  M.,  Mr.  W.  E.  Hughes  in  the  chair. 

Mr.  J.  H.  Call:  "Mr.  Chairman,  there  is  a- call  made  for 
a  meeting  of  the  Executive  Committee,  which  has  important 
work  to  transact,  many  of  whom  desire  to  leave  the  city  this 
evening,  and  I  think  the  work  of  the  Convention  has  been  fin- 
ished. I  desire  to  move  that  this  Convention  return  its  thanks 
for  the  efficient  and  able  manner  in  which  the  presiding  officers 
and  also  the  Secretaries  of  the  Convention  have  performed  their 
respective  duties;  and  that  this  Convention  adjourn  sine  die  at 

3  o'clock  p.  M.  today." 

The  motion  prevailed. 

Judge  S.  H.  Cowan  :  "Mr.  Chairman,  there  has  been  a  great 
deal  of  misapprehension  in  the  public  mind  with  respect  to  the 
probable  jurisdiction  of  the  courts  over  railroad  rate  questions. 
I  would  like  to  say  that  I  have  prepared  for  the  purpose  of  pre- 
senting to  this  Convention  some  thoughts  upon  the  subject,  which 
will  serve  in  a  measure  as  an  answer  to  the  position  which  has 
been  taken  that  the  subject  of  railroad  rate  regulation  may  be 


120 

relegated  to  the  courts.  I  would  like  to  say  in  eoniiection  with 
presenting  it, — ^with  the  request  that  it  be  made  a  part  of  the 
proceedings  of  this  meeting,  and  published, — that  there  are  two 
or  three  principles,  which,  if  they  are  observed,  would  enable 
the  mind  of  the  laity  to  come  to  a  correct  conclusion,  lust  as 
well  as  the  best  law^^ers.  One  is  tliat  the  legislative  department 
of  the  government  cannot  invade  the  judicial  department.  An- 
other is  the  judicial  department  cannot  perform  the  office  of  the 
administrative  or  legislative  department.  The  third  is  that  the 
Supreme  Court  has  decided  that  under  our  constitution,  the 
making  of  a  rate  for  the  future  is  a  legislative  and  not  a 
judicial  act. 

The  conclusion  from  those  three  propositions  is  that  the 
court  may  determine  what  a  reasonable  rate  has  been  for  the 
past  and  is  at  present,  in  order  to  enable  it  to  decree  some 
judicial  relief,  like  a  recovery  for  damages.  But  it  cannot  do 
that  in  order  to  enable  it  to  fix  by  injunction  or  otherwise  what 
shall  be  the  rate  for  the  future,  maximum,  minimum  or  otherwise. 

One  other  proposition,  that  the  Supreme  Court  of  the  United 
States  has  held  definitely,  and  in  this  article  5^ou  will  find  the 
quotation,  that  where  the  legislative  authority  or  the  legislature 
itself  has  fixed  a  rate,  if  it  has  fixed  it  at  a  point  where  it  would 
not  afford  a  reasonable  return  upon  the  money  invested  in  the 
property  employed  in  the  public  service,  that  is  a  deprivation  of 
constitutional  rights  of  property,  to  protect  which  the  courts 
have  the  full  machinery,  just  as  complete  as  could  possibly  be 
enacted  in  the  most  carefully  drawn  legislative  enactment. 
Hence  there  is  no  defense  whatever  when  a  Commission  fixes 
a  rate  but  that  the  railroad  will  have  the  right  to  invoke  the 
jurisdiction  of  the  court,  either  state  or  federal,  to  determine 
whether  that  rate  is  at  such  a  figure  that  it  does  not  afford  a 
fair  and  just  compensation  to  the  railroads,  as  well  as  to  the 
public,  for  the  service  performed. 

I  respectfully  commend  this  article  to  you,  gentlemen,  and 
ask  leave  to  have  it  printed  as  a  part  of  your  proceedings." 

The  Chairman  :  "Gentlemen,  you  hear  tlie  request.  If 
there  is  no  objection  it  will  be  granted." 

REGULATION  OF  RAILROADS  BY  MEANS  OF  A  COM- 
MISSION THE  ONLY  REMEDY.     THE  SUBJECT 
CANNOT  BE  RELEGATED  TO  THE  COURTS. 

BY  S.   H.   COWAN,  OP  FORT  WORTH,  TEXAS. 

"At  this  time  when  the  railroads  almost  with  unanimity  op- 
pose giving  to  the  Interstate  Commerce  Commission  the  power 
to  regulate  railroad  rates,  so  that  it  may  establish  and  enforce 


121 

a  lawful  rate  in  lieu  of  tliat  which  it  finds  unlawful,  and  insist 
that  whatever  power  is  exercised  in  this  particular  should  be 
exercised  by  the  courts ;  and  in  view  of  the  fact  that  some  United 
States  Senators  and  Congressmen  and  a  number  of  so-called 
economists  appear  to  subscribe  to  the  idea  of  regulating  rates 
by  judgments  and  decrees  of  the  courts  through  the  process  of 
injunction  and  otherwise,  it  seems  timely  to  analyze  the  propo- 
sition, to  ascertain  just  what  it  means,  and  point  out  the  fallacy 
of  it. 

At  the  outset  it  may  be  safely  stated  as  a  rule  that  the 
railroads  and  those  who  receive  their  inspiration  from  the  rail- 
way interests,  are  primarily  opposed  to  any  proposed  amend- 
ments to  the  present  law  which  might  reduce  the  earnings  of 
the  railroads  or  limit  their  power  to  earn,  or  which  would  limit 
their  control  over  the  making  and  adjustment  of  freight  rates. 
The  very  purpose  of  railway  existence  is  to  make  money,  there- 
fore the  principles  of  self-defense  will  always  inspire  a  resist- 
ance to  regulation  limiting  the  earnings,  and  it  will  be  safe  to 
view  every  proposal  they  may  make  in  the  light  of  this  primary 
truth.  They  all  agree  that  there  should  be  no  rebates ;  manifestly 
self-interest  is  a  sufficient  motive  for  this  desire,  as  it  has  been 
the  motive  for  paying  rebates,  and  hence  they  are  willing  that 
the  law  should  be  as  stringent  as  possible  to  prevent  giving 
rebates;  for  in  this  way  they  have  nothing  to  lose  and  all  to 
gain.  They  all  profess  to  oppose  discrimination,  but  the  sin- 
cerity of  this  profession  as  applied  to  all  discriminations  is  open 
to  serious  doubt.  If  they  mean  that  the  term  'discrimination' 
shall  be  applied  to  undue  preferences  as  between  different  locali- 
ties and  different  sorts  of  traffic,  the  very  insistence  which  they 
make  to  have  the  control  of  rates  left  entirely  with  them  and 
not  to  be  regulated  or  fixed  by  the  Commission,  is  utterly  incon- 
sistent with  any  law  which  could  with  practical  effect  regulate 
the  matter  of  such  discriminations.  Indeed  the  most  strenuous 
and  at  the  same  time  fallacious  argument  they  make  is  that  a 
Commission  cannot  adjust  differentials  to  suit  commercial  con- 
ditions because  it  must,  as  they  insist,  adopt  a  mileage  basis  of 
rates  from  everywhere  to  everywhere,  and  thus  give  preference 
to  some  ports  over  others,  and  as  they  claim,  thereby  violate  the 
Constitution,  as  well  as  upset  all  our  commercial  affairs,  in  fear 
of  which  alleged  calamities  it  is  insisted  that  the  adjustment  of 
relative  rates  must  be  left  with  the  railroads. 

This  is  the  mere  straw  man  erected  in  order  that  it  may  be 
assaulted  and  destroyed,  so  that  the  world  may  applaud  as  it 
views  the  destruction  of  so  monstrous  an  enemy.  The  assump- 
tion that  the  Commission,  either  of  its  own  desire  or  in  order 
to  avoid  violating  the  Constitution,  which  prohibits  preference 
to  one  port  over  another,  or  because  of  any  other  constitutional 


122 

provision,  will  adopt  a  mileage  basis  of  rates,  is  so  entirely  un- 
founded, both  in  law  and  fact,  that  one  wonders  at  the  boldness 
of  an  argument  based  entirely  upon  this  false  premise.  Eates 
to  be  just  and  reasonable  cannot  conform  to  a  mileage  basis, 
always. 

The  opinion  of  the  Attorney  General  upon  the  subject  ex-- 
pressed  the  concensus  of  opinion  of  the  bar,  that  the  Constitu- 
tion can  be  given  no  such  application.  In  no  case  has  the  Com- 
mission by  any  opinion  given  the  slightest  ground  for  the  as- 
sumption that  rates  are  to  be  or  must  be  made  on  a  mileage 
basis.  On  the  contrary,  the  history  of  its  decisions  proves  exactly 
the  opposite.  That  distance  is  an  important  factor  in  the 
equation  neither  railroads  nor  Commission  doubts;  and  in  ab- 
sence of  other  controlling  factors  frequently  present,  regard  is 
paid  in  making  rate  schedules  to  distance;  for  it  is  manifest 
that  the  cost  of  the  service  increases  with  distance,  though  less 
per  mile  for  long  than  for  short  distances.  There  is  not  the 
slightest  danger  that  a  Commission  would  in  theory  or  practice 
adopt  any  system  to  disturb  rate  relations  of  long  standing  be- 
tween commercial  centers  which  are  not  clearly  unjustly  dis- 
criminatory. To  attempt  that,  or  to  revolutionize  commerce  by 
adopting  a  mileage  basis  of  rates,  would  not  be  desired  by  any- 
body; and  it  approaches  the  ridiculous  to  make  any  such  con- 
tention. But  the  fact  that  it  is  made,  clearly  demonstrates  the 
point  that  the  railroads  vehemently  oppose  a  rate  regulation 
which  will  reach  the  most  common  form  of  discrimination,  viz: 
that  between  localities  and  different  kinds  of  traffic.  Their  as- 
sertions that  they  favor  abolishing  discriminations  are  worth 
little  when  their  acts  are  to  the  contrary. 

The  wisdom  of  accepting  the  oft-repeated  declaration  that 
the  railroads  are  themselves  opposed  to  discriminations  and 
favorable  to  laws  preventing  them  is  not  apparent,  when  it  is 
discovered  that  this  opposition  does  not  extend  to  discrimina- 
tions between  places  and  different  kinds  of  traffic.  This  oppo- 
sition to  discriminations  reaches  only  those  which  they  desire 
to  prevent,  and  leaves  with  the  railroads  the  great  power  of  con- 
trolling the  relation  of  rates,  whereby  they  may  make  or  unmake 
communities  commercially,  designate  the  location  and  success 
of  industries,  the  course  and  direction  of  trade  and  commerce, 
as  well  as  the  value  of  property ;  in  other  words  work  discrimina- 
tions to  them  desirable.  It  is  this  power  which  they  seek  to 
retain,  which  the  public  seeks  to  regulate. 

If  the  term  "discrimination"  is  to  be  applied  only  to  dis- 
criminations between  persons  for  a  like  and  contemporaneous 
service,  then  it  can  be  readily  seen  that  the  railroads  do  not 
object  to  the  law  preventing  that,  for  the  provisions  of  the  law 
against  it  amount  to  nothing  more  than  the  law  against  rebates. 


123 

If  the  published  rates  are  observed,  every  person  is  entitled  to 
and  will  obtain  like  and  contemporaneous  service  for  the  same 
price,  viz :  that  stipulated  in  the  published  tariffs ;  if  not  observed 
it  is  a  rebate. 

It  is  contended  by  the  railroads  that  they  must  be  left  to 
judge  of  the  circumstances  and  to  then  fix  the  relation  of  rates 
as  between  places  and  commodities ;  and  that  it  is  their  peculiar 
province  to  give  effect  such  as  they  please  to  those  comparative 
commercial  conditions  and  their  own  respective  necessities  which 
affect  the  relative  amount  of  the  rate  between  places  and  dif- 
ferent kinds  of  traffic,  protesting  against  the  Commission  having 
any  control  over  it.  It  follows,  therefore  necessarily,  that  they 
are  opposed  to  the  regulation  of  that  class  of  discriminations 
which  may  arise  with  respect  to  relative  rates  between  places 
and  between  different  commodities,  by  conferring  the  power  on 
any  tribunal  to  regulate  such  rates.  The  opposition  very  natur- 
ally arises  from  the  motive  to  make  money,  as  well  as  the  desire 
to  be  left  free  in  the  conduct  of  their  affairs  like  any  private 
business.  They  do  not  ostensibly  direct  their  opposition  to  the 
law  itself,  which  declares  all  unreasonable  and  unjustly  discrimi- 
nating rates  to  be  unlawful  and  therefore  prohibited ;  their  oppo- 
sition is  apparently  directed  at  the  enactment  of  a  remedy 
through  the  ascertainment  of  the  fact  of  unreasonableness  or 
unjust  discrimination  and  the  speedy  correction  of  rates  which 
violate  those  prohibitory  features  of  the  law,  which  in  practical 
effect  is  equivalent  to  opposing  the  principle  of  regulation  itself. 
This  is  no  doubt  born  of  the  conception — quite  correct — that  a 
law  without  a  remedy  is  harmless. 

The  law  against  rebates  and  discriminations  between  persons 
in  the  nature  of  rebates  is  generally  conceded  to  be  as  effective 
as  it  can  be  made  to  prevent  evils  of  that  sort  which  the  railroads 
concede  should  be  prevented  and  which  plainly  is  for  their 
financial  well  being,  hence  there  is  no  reason  for  them  to  oppose 
either  the  law  or  remedy  in  that  particular. 

The  railroads  are  opposed  to  any  change  in  the  law  which 
may  adversely  affect  them,  and  that  opposition  is  directed  at 
the  proposition  to  give  the  Interstate  Commerce  Commission 
the  necessary  power  to  regulate  the  amount  of  the  rate,  where 
it  is  claimed  to  be  unreasonable  or  unjustly  discriminatory  as 
between  localities  or  kinds  of  traffic;  for  a  correction  of  such 
rates  by  reduction  touches  the  pocketbook,  the  heart  of  all  cor- 
porations. The  professed  anxiety  to  have  the  law  amended  so 
as  to  prevent  discrimination  and  rebates  and  the  continued 
assertion  that  the  rates  in  and  of  themselves  are  reasonable 
and  that  complaints  are  only  made  against  discriminations  be- 
tween persons  and  against  rebates,  are  inspired  by  the  hope 
that  if  Congress  may  be  convinced  of  the  truth  of  that  state- 


124 

ment  and  its  attention  distracted  from  the  real  evil,  it  may  be 
thereby  induced  not  to  give  the  Commission  the  power  to  change 
a  rate.  The  alleged  incompetency  of  the  present  Commission 
or  any  Commission  to  fix  a  proper  rate  springs  from  the  same 
motive. 

But  fearing,  doubtless,  that  these  contentions  will  not  prove 
sufficient  to  prevent  some  legislation  upon  the  subject,  their  next 
insistence  in  aid  of  their  policy  to  side  track  any  remedy  whereby 
the  amount  of  the  rates  mav  be  chano-ed  to  afford  relief,  is  that 
the  subject  shall  be  relegated  to  the  courts;  this  would  give  a 
remedy  in  name  only.  They  insist  that  under  the  Elkins'  Act 
the  courts  are  now  vested  with  the  authority  to  prevent  all  re- 
bates and  discriminations  of  every  character  by  the  process  of 
injunction,  and  that  if  the  power  does  not  already  sufficiently 
exist  in  the  courts  to  prevent  rebates  and  like  discriminations 
by  injunction,  that  the  Elkins'  Act  be  so  amended  that  tlie 
court's  power  will  be  ample  in  that  particular.  That  when  this 
is  done  the  only  question  remaining  is  that  of  the  reasonableness 
of  rates,  as  to  which  it  is  naively  conceded  by  some,  that  the 
Commission  or  the  court  may  determine  that  an  existing  rate 
is  unreasonable,  if  it  be  left  to  the  roads  to  correct  it  as  they 
please ;  but  it  is  insisted  that  the  remedy  of  correcting  an  un- 
reasonable rate  by  substituting  one  that  is  reasonable  either 
by  the  Commission  or  court,  should  not  be  granted  for  various 
reasons  stated,  which  it  is  imnecessary  to  here  enumerate. 
Thus  they  deny  the  right  and  expedienc}^  of  the  only  remedy 
which  can  inure  to  the  public  good  which  would  cost  them  any- 
thing, the  substituting  of  a  right  rate  for  the  wrong  one. 

In  this  connection,  however,  the  insistence  seems  to  be,  when 
reduced  to  its  last  analysis,  that  the  determination  of  all  ques- 
tions of  reasonableness  of  rates  or  which  affect  the  amount  of 
the  rate,  if  any  tribunal  is  to  decide  the  same,  should  be  left 
ultimately  to  the  courts.  This  idea  has  found  its  inspiration 
from  the  fertile  minds  of  those  who  really  oppose  any  regulation 
and  is  liable  to  mislead  those  who  have  not  studied  the  question 
thoroughly.    It  may  look  fair,  but  it  is  "loaded." 

KEMEDY  THROUGH  LITIGATION  IN  COURT  UTTERLY  FUTILE. 

The  most  important  ultimate  fact  for  determination  in  con- 
troversies arising  between  the  shipper  and  the  railroad  with 
respect  to  rates,  will  nearly  always  be  the  amount  of  the  rate, 
and  any  remedy  which  falls  short  of  providing  for  correcting 
it  by  changing  the  amount  of  the  rate  will  in  practical  effect 
be  no  remedy  at  all.  It  may  be  conceded  that  Congress  will  act 
with  the  intention,  on  the  part  of  the  majority,  at  least,  of  pro- 
viding the  most  simple  and  adequate  remedy  practicable  in  jus- 
tice to  the  railroads  and  to  the  public.     The  difficulty  has  not 


135 

been  and  will  not  be  so  much  to  induce  tbeni  to  have  this  inten- 
tion as  to  adopt  the  proper  means  to  put  it  into  effect.  In  a 
multitude  of  proposed  remedies  the  raind  is  so  likely  to  become 
mystified  and  uncertain,  regardless  of  the  intention  to  do  the 
proper  thing-,  that  a  bad  law  may  be  passed  in  spite  of  the  good 
intentions  of  the  law  makers.  Time  and  opportunity  for  investi- 
gation of  so  extensive  a  subject  must  be  limited.  The  great 
and  overwhelming  power  of  the  railroads  to  influence  Senators 
and  Congressmen,  directly  or  indirectly,  often  times  without 
the  source  of  it  being  apparent,  having  the  purpose  to  invent 
and  promulgate  a  multitude  of  plausible  objections  to  any  pro- 
posed law  upon  the  subject,  to  befog  and  muddle  the  minds  of 
those  who  are  to  act  upon  it,  may  go  far  in  the  direction  of  so 
shaping  whatever  law  is  passed  that  it  will  not  in  its  practical 
effect  carry  out  the  good  intentions  which  will  actuate  a  ma- 
jority of  Senators  and  Congressmen.  Perhaps  the  most  in- 
genious and  plausible,  and  at  the  same  time  apparently  fair 
scheme  which  has  been  invented  to  subserve  the  railway  interests 
in  this  direction,  is  that  the  matter  of  ultimately  regulating 
rates  shall  be  relegated  to  the  courts,  directly  or  indirectly. 

It  is  not  my  purpose,  in  fact  it  is  far  from  me,  to  cast  any 
suspicion  or  reflection  upon  the  courts ;  but  my  purpose  is  to 
show  the  futility  and  utter  nonsense  of  adopting  any  such  plan, 
even  were  it  constitutional,  which  plainly  it  is  not.  Nor  do 
I  advocate  that  the  judiciary  should  be  shorn  of  any  of  the 
powers  which  it  possesses,  under  the  constitution;  nor  any  per- 
son or  corporation  be  deprived  of  tbe  right  to  invoke  the  juris- 
diction of  the  courts  on  all  subjects  of  rightful  judicial  cog- 
nizance. With  respect  to  the  matters  of  correcting  railroad  rates 
the  jurisdiction  of  the  courts  should  remain  as  it  is  for  pro- 
tection of  legal  and  constitutional  rights,  and  an  appropriate 
legislative  remedy  should  be  provided  for  and  applied,  to  legis- 
late in  effect  what  rate  should  be  charged  to  the  end  of  secur- 
ing just,  fair  and  reasonable  rates  during  the  lifetime  of  a  com- 
plainant, ratlier  than  to  adopt  the  futile  course  of  litigating  the 
rates  and  under  the  pretence  of  a  reuiedy  give  none,  generally 
reaching  a  decision  after  the  death  or  bankruptcy  of  the  com- 
plainant. The  matters  to  be  considered  by  any  tribunal  which 
is  called  upon  to  correct  a  rate,  are  of  such  character  as  to  in- 
volve at  tbe  very  outset  questions  of  public  policy,  and  which 
affect  not  merely  the  complainant  but  the  public  in  many  par- 
ticulars and  are  always  legislative  in  character.  Courts  do  not 
determine  the  policy  of  the  government;  that  must  be  from 
legislation.  Courts  only  declare  what  policy  the  legislature  has 
adopted. 

Courts  must  of  necessity  in  rendering  judgments  and  de- 
crees, be  governed  by  the  law  as  applied  to  the  facts  presented 


126 

in  each  particular  case,  and  the  question  as  to  whether  or  not 
a  given  rate  of  freight  ought  to  be  changed  for  the  future,  its 
reasonableness  being  a  question  of  fact  and  not  of  law,  in  the 
very  nature  of  things  cannot  be  tried  and  determined  by  a  court 
upon  the  record  before  it  for  the  want  of  a  judicial  standard 
of  a  future  rate,  as  well  as  for  want  of  constitutional  power  to 
perform  the  legislative  act  of  fixing  future  rates. 

Take  for  example  any  of  the  various  class  or  commodity  rates 
on  the  various  lines  of  railroad  between  so-called  competitive 
and  non-competitive  points  or  to  the  seaboard  for  export  as 
compared  to  domestic  use,  or  the  comparative  rates  between  raw 
material  and  manufactured  products,  and  tlie  rates  which  should 
be  charged  from  the  commercial  or  manufacturing  centers  to 
different  points  of  distribution  or  consumption,  and  suppose 
the  amount  of  any  one  of  those  rates  or  a  half  dozen  of  them  to 
be  involved  in  controversy,  it  will  be  readily  seen  that  the  mat- 
ters for  consideration  are  practically  without  limit,  all  of  them 
questions  of  fact  and  of  sound  policy,  none  of  which  are  con- 
trolling, and  not  generally  dependent  upon  a  question  of  law. 
At  last  any  tribunal  which  fixes  the  amount  of  the  rate  must 
do  so  arbitrarily  upon  its  enlightened  judgment,  just  like  the 
legislature  or  legislative  committee  and  without  the  possibility 
of  having  in  a  record  in  the  shape  of  legal  testimony  all  of  the 
matters  from  which  it  arrives. at  its  conclusions.  It  is  a  ques- 
tion of  judgment  upon  the  facts  as  to  what  the  rate  for  the 
future  ought  to  be  under  the  circumstances  known  to  that 
tribunal,  whether  proven  or  not  in  the  particular  case,  and 
cannot  be  made  a  matter  of  correct  judicial  ascertainment  by 
the  record  of  the  evidence  on  the  trial  of  a  particular  case  ac- 
cording to  judicial  methods,  and  yet  do  justice  to  the  public, 
the  shipper  and  the  railroad.  The  attempt  to  give  an  adequate, 
simple,  speedy  remedy  through  that  means  is  manifestly  a  mere 
farce.  And  again  the  multifarious  duties  of  the  courts  in  no 
sense  fit  them  for  deciding  these  matters;  indeed  deprive  them 
of  the  opportunity  to  devote  sufficient  time  to  the  subject  to 
really  qualify  them  to  do  so.  The  case  made  would  depend  as 
much  upon  the  skill  of  counsel  as  anything  else,  and  different 
courts  would  hold  to  different  ideas;  thus  all  uniformity  would 
be  destroyed. 

SUPREME    COURT   EAVORS    COMMISSION    IDEA. 

Considerations  of  exactly  this  character  of  difficulty  led  the 
Supreme  Court  of  the  United  States,  in  the  case  of  Smyth  vs. 
Ames  (Nebraska  rate  case,  169  U.  S.,  466,  at  page  527),  to  say: 

"What  are  the  considerations  to  which  weight  must  be  given 
when  we  seek  to  ascertain  the  compensation  that  a  railroad  com- 
pany is  entitled  to  receive,  and  a  prohibition  upon  the  receiving 
of  which  may  be  fairly  deemed  a  deprivation  by  legislative  decree 


127 

of  property  without  due  process  of  law?  Undoubtedly  that 
question  could  be  more  easily  determined  by  a  commission  com- 
posed of  persons  whose  special  skill,  observation  and  experience 
qualify  them  to  so  handle  great  problems  of  transportation  as 
to  do  justice  both  to  the  public  and  to  those  whose  money  has 
been  used  to  construct  and  maintain  highways  for  the  conveni- 
ence and  benefit  of  the  people." 

THE    CONSTITUTION    PROTECTS    THE   RIGHT    TO    EARNINGS    WHICH 
ARE  JUST  TO  THE  RAILROADS.      COURTS  STOP  THERE. 

It  is  true  that  the  Supreme  Court  in  this  very  case  proceeded 
to  determine  the  question  as  to  whether  the  schedule  of  rates 
fixed  by  the  state  of  Nebraska  were  violative  of  the  rights  of 
the  railroads  under  the  fovirteenth  amendment  of  the  constitu- 
tion of  the  United  States,  but  it  was  passing  upon  a  whole  sched- 
ule of  rates  and  not  a  given  rate  on  a  given  class  or  commodity 
and  was  not  attempting  to  fix  what  the  amount  of  the  rates 
ought  to  be  on  all  or  any  one  class  or  commodity,  but  merely 
to  determine  whether  the  schedule  was  in  violation  of  the  rights 
of  the  roads  under  the  constitution,  because  of  having  been  re- 
duced to  a  point  so  low  as  not  to  afi^ord  a  just  compensation. 

In  the  case  just  cited  it  is  said  that :  "A  state  enactment  or 
regulation  made  under  the  authority  of  a  state  enactment,  estab- 
lishing rates  for  the  transportation  of  persons  or  property  by 
railroad  that  will  not  admit  of  the  carrier  earning  such  com- 
pensation as  under  all  the  circumstances  is  just  to  it  and  to  the 
public,  would  deprive  such  carrier  of  its  property  without  due 
process  of  law,  and  deny  to  it  the  equal  protection  of  the  laws, 
and  would  therefore  be  repugnant  to  the  fourteenth  amendment 
of  the  constitution  of  the  United  States." 

It  is  not  perceived  wherein  the  same  rule  is  not  equally  ap- 
plicable to  a  rate  fixed  by  Congress  directly  or  through  the  means 
of  a  Commission.  That  the  principle  is  equally  applicable  is 
made  clear  by  another  quotation  from  the  same  case,  wherein 
it  is  stated  that: 

"The  idea  that  any  legislature,  state  or  federal,  can  conclu- 
sively determine  for  the  people  and  for  the  courts  that  what  it 
enacts  in  the  form  of  law,  or  wliat  it  authorizes  its  agents  to  do, 
is  consistent  with  the  fundamental  law,  is  in  opposition  to  the 
theory  of  our  institutions.  The  duty  rests  upon  all  courts, 
federal  and  state,  when  their  jurisdiction  is  properly  invoked, 
to  see  to  it  that  no  right  secured  by  the  supreme  law  of  the 
land  is  impaired  or  destroyed  by  legislation.  This  function 
and  duty  of  the  judiciary  distinguishes  the  American  system 
from  all  other  systems  of  government.  The  perpetuity  of  our 
institutions  and  the  liberty  which  is  enjoyed  under  them  depend, 
in  no  small  degree,  upon  the  power  given  the  judiciary  to  declare 


128 

null  and  void  all  legislation  that  is  clearly  repugnant  to  the 
supreme  law  of  the  land." 

All  the  rates,  therefore,  fixed  through  the  means  of  a  Com- 
mission or  by  direct  legislation,  are  subject  to  investigation  by 
the  courts.  In  such  investigation  the  fact  may  be  determined 
as  to  whether  the  rate  or  rates  so  fixed  would  deprive  "the  car- 
rier of  earning  such  compensation  as  under  all  of  the  circum- 
stances is  just  to  it  and  to  the  public" ;  and  in  the  event  it  should 
be  determined  by  the  court  that  the  rate  or  rates  so  fixed  would 
not  admit  of  the  carrier  earning  such  just  compensation,  then 
that  would  "deprive  such  carrier  of  its  property  without  due 
process  of  law,  and  deny  to  it  the  equal  protection  of  the  laws, 
and  would  therefore  be  repugnant  to  the  fourteenth  amendment 
of  the  constitution  of  the  United  States."  In  such  a  case  the 
court  would  not  attempt  to  fix  what  the  rate  should  be.  That 
the  court  will  not  exercise  the  jurisdiction  to  fix  rates  is  made 
clear  by  the  decisions  of  the  Supreme  Court  of  the  United  States 
in  the  case  of  Eeagan  vs.  Loan  Co.,  154  U.  S.,  1023 : 

"The  courts  are  not  authorized  to  revise  or  change  the  body 
of  rates  imposed  by  a  legislature  or  commission;  they  do  not 
determine  whether  one  rate  is  preferable  to  another,  or  what 
under  all  circumstances  would  be  fair  and  reasonable  as  be- 
tween the  carriers  and  the  shippers;  they  do  not  engage  in  any 
mere  administrative  work;  but  still  there  can  he  no  doubt  of 
their  power  and  duty  to  inquire  whether  a  body  of  rates  pre- 
scribed by  a  legislature  or  a  Commission  is  unjust  and  unreason- 
able, and  such  as  to  work  a  practical  destruction  to  rights  of 
property,  and  if  found  so  to  be,  to  restrain  its  operation." 

This  being  the  law,  can  there  be  any  real  danger  of  confisca- 
tion by  the  Commission?  The  shipper  cannot  successfully  liti- 
gate the  reasonableness  of  rates. 

Although  the  court  has  the  jurisdiction  and  does  determine 
the  facts  for  the  purpose  of  ascertaining  whether  the  constitu- 
tion is  thus  being  violated,  that  falls  far  short  of  determining 
what  the  rate  ought  to  be,  or  of  taking  jurisdiction  to  determine 
that  fact.  It  is  not  even  a  step  in  that  direction.  Any  system 
of  laws  with  respect  to  this  subject  which  provides  for  the  trial 
in  court  of  the  reasonableness  of  a  rate  for  the  purpose  of  doing 
justice  in  the  matter  of  future  charges,  will  fail  to  afford  any 
adequate  remedy  for  the  simple  reason,  as  well  as  a  multitude 
of  others,  that  the  shipper  will  rarely  be  able,  in  the  face  of  the 
powerful  opposition  of  the  railroads  in  the  unequal  contest,  to 
make  out  his  case,  as  to  the  rate  which  he  complains  of;  they  can 
drown  him  witli  proof  which  a  court  must  accept  and  which  is 
not  controlling  with  a  Commission  charged  by  law  witli  the 
duty  of  informing  itself  and  acting  upon  its  judgment  like  a 
legislature.     The  difficulties  in  flic  way  of  such  court  trials  of 


129 

the  questions  thus  involving  the  unlimited  and  illimitable  scope 
of  the  evidence,  the  fact  that  it  is  mostly  in  possession  of  the 
railroads,  or  exists  in  statistics  generally  impossible  of  proof 
under  rules  of  law,  the  great  expense  and  loss  of  time  and  the 
chance  of  ultimate  defeat,  are  obstacles  which  the  stoutest 
heart  would  scarcely  attempt  to  overcome.  The  attempt  would 
generally  result  in  failure. 

In  speaking  upon  this  subject  and  the  difficulties  in  the  way 
of  such  litigation  being  carried  on  by  the  shipper,  the  Supreme 
Coiirt  of  the  United  States,  in  United  States  vs.  Trans-Missouri 
Freight  Association,  166  United  States^  p.  331-2,  in  its  opinion 
says  that : 

"It  is  at  once  apparent  that  the  subject  of  what  is  a  reason- 
able rate  is  attended  with  great  imcertainty.  What  is  a 
proper  standard  by  which  to  judge  the  fact  of  reasonable  rates? 
j\Iust  the  rate  be  so  high  as  to  enable  the  return  for  the  whole 
business  done  to  amount  to  a  sum  sufficient  to  afford  the  share- 
holder a  fair  and  reasonable  profit  upon  his  investment?  If  so, 
what  is  a  fair  and  reasonable  profit?  That  depends  sometimes 
upon  the  risk  incurred,  and  the  rate  itself  differs  in  different 
localities.  Which  is  the  one  to  which  reference  is  to  be  made 
as  the  standard?  Or  is  the  reasonableness  of  the  profit  to  be 
limited  to  a  fair  return  upon  the  capital  that  would  have  been 
sufficient  to  build  and  equip  the  road,  if  honestly  expended  ?  Or 
is  still  another  standard  to  be  created  and  the  reasonableness 
of  the  charges  tried  by  the  cost  of  the  carriage  of  the  article, 
and  a  reasonable  profit  allowed  on  that?  And  in  such  case 
would  contribution  to  a  sinking  fund  to  make  repairs  upon  the 
roadbed  and  renewal  of  cars,  etc.,  be  assumed  as  a  proper  item? 
Or  is  the  reasonableness  of  the  charge  to  be  tested  by  reference 
to  the  charges  for  the  transportation  of  the  same  kind  of  prop- 
erty made  by  other  roads  similarly  situated?  If  the  latter,  a 
combination  among  such  roads  as  to  rates  would,  of  course, 
furnish  no  means  of  answering  the  question.  It  is  quite  ap- 
parent, therefore,  that  it  is  exceedingly  difficult  to  formulate 
even  the  terms  of  the  rule  itself  which  should  govern  in  the 
matter  of  determining  what  would  be  reasonable  rates  for  trans- 
portation. While  even  after  the  standard  should  be  determined 
there  is  such  an  infinite  variety  of  facts  entering  into  the  ques- 
tion of  what  is' a  reasonable  rate,  no  matter  what  standard  is 
adopted,  that  any  individual  shipper  would  in  most  cases  be 
apt  to  abandon  the  effort  to  show  the  unreasonable  character 
of  a  charge,  sooner  than  hazard  the  great  expense  in  time  and 
money  necessary  to  prove  the  fact,  and  at  the  same  time  incur 
the  ill-will  of  the  road  itself  in  all  his  future  dealings  with  it." 


130 


ONLY  A   COMMISSION    CAN   ADOPT   PRACTICAL   METHODS, 

One  vital  difference  between  a  commission  and  a  court  in 
reaching  a  conclusion  and  deterinining  what  a  rate  ought  to 
be;,  lies  in  the  fact  that  a  court  must  determine  the  case  ac- 
cording to  the  record  before  it  and  according  to  the  proof 
made,  and  this  is  the  limit  which  the  law  fixes;  while  a  Com- 
mission determines  what  a  rate  ought  to  be  from  a  practical 
standpoint,  not  only  from  a  consideration  of  the  record  made 
in  the  investigation  of  a  particular  case,  but  upon  the  in- 
formation which  it  possesses  and  from  the  entire  field  of  in- 
vestigation and  knowledge  which  as  men  the  Commission  pos- 
sess. There  is  no  fact  which  the  court  may  ascertain  which 
the  Commission  may  not  also  ascertain.  And  having  the  great 
advantage  of  using  their  own  accumulated  knowledge  and  of 
deciding  from  the  ascertained  facts  of  the  particular  case,  it 
is  clear  that  the  Supreme  Court  was  correct  in  saying  that 
"Undoubtedly  that  question  (reasonableness  of  rates)  could  be 
more  easily  determined  by  a  Commission  composed  of  persons 
whose  special  skill,  observation  and  experience  qualify  them/' 
etc.,  than  by  the  court. 

May  it  not  be  that  the  anxiety  of  the  railroads  to  place 
the  matter  in  the  hands  of  the  courts  is  but  a  scheme,  ap- 
parently fair  on  its  face,  resorted  to  in  order  to  the  more 
easily  induce  Senators  and  Congressmen  who  favor  correct  legis- 
lation and  furnish  an  excuse  to  those  who  do  not  (if  such  there 
be),  to  pass  a  worthless  law?  The  manifestly  unfounded  charge 
and  inadmissible  criticism  against  the  Commission  that  it  has 
not  enforced  the  law,  affords  but  poor  excuse  and  groundless 
objection  to  the  passage  of  a  law  giving  the  Commission  the 
potver  to  enforce  it.  If,  instead,  the  railroads  can  so  shift  it 
about  that  the  remedies  of  the  law  will  be  that  a  complainant 
may  merely  litigate  with  the  railroad  the  question  pertaining 
to  the  rates  of  which  he  complains,  either  before  the  courts 
or  Commission,  and  leave  his  administrator  or  trustee  in  bank- 
ruptcy to  wind  it  up  by  dismissing  and  paying  the  cost,  their 
success  will  have  been  complete  and  they  will  have  succeeded 
in  adding  to  their  successes  many  other  cases  where  attempts 
to  enforce  the  law  against  unreasonable  rates  met  with  defeat. 
Yet  this  very  character  of  defeats — unsuccessful  efforts  to  liti- 
gate rates  and  the  failure  to  litigate  them — are  paraded  as 
proof  that  such  rates  were  not  imjust  or  unreasonable.  The 
law,  it  is  said,  has  always  furnished  a  remedy  to  recover  back 
the  unreasonable  part  of  any  charge  made  by  a  common  car- 
rier, but  how  seldom  has  it  ever  been  attempted.  Yet  the  fail- 
ure to  apply  that  remedy  has  been  claimed  as  proof  that  rates 
are  reasonable.  The  logic  of  it  is  that  these  failures  prove 
the  known  inadequacy  of  such  pretenses  of  a  remedy. 


131 

If  the  railroads  desire  that  the  remedy  be  to  litigate  rather 
tliaii  legislate  the  rate,  it  is  easy  to  guess  the  reason — it  would 
be  but  a  repetition  of  these  failures,  for  the  shipper  would  have 
the  burden  of  proving  his  case  with  sufficient  clearness  to  sus- 
tain the  extraordinary  remedy  of  injunction;  a  burden  which 
he  could  rarely  meet  and  would  seldom  undertake.  Whereas, 
if  through  the  medium  of  a  Commission  the  government  in 
effect  legislates  the  rate,  the  Commission  undertakes  the  ascer- 
tainment of  the  facts  and  upon  its  judgment  applies  the  rem- 
edy of  changing  the  rate. 

The  remedy  of  preventing  wrongs  by  injunction  is  an  ex- 
traordinary one,  and  in  theory  at  least  cannot  be  applied  ex- 
cept where  there  is  no  adequate  remedy  at  law;  the  very  fail- 
ure of  the  law  to  provide  the  remedy  calls  for  invoking  the 
equity  jurisdiction.  As  nearly  as  is  practicable  undoubtedly 
the  law  should  prescribe  the  rule  of  conduct;  that  is  the  duty 
of  the  legislature  and  it  then  remains  with  the  courts  in  the 
proper  exercise  of  their  powers  to  compel  obedience  to  and 
punish  violations  of  the  law.  It  is  clearly  and  indisputably 
a  legislative  function  to  fix  the  rate  of  freight  to  be  charged 
for  the  future,  and  that  must  be  done  by  legislative  action 
directly  or  through  a  Commission.  When  the  rate  is  fixed  it 
becomes  the  law  and  it  is  the  duty  of  the  court^  to  compel 
obedience  and  to  punish  violations.  While  such  rate  is  the  law 
it  remains  so  only  while  in  force  and  when  changed  then  the 
substituted  rates  becomes  the  law  and  so  on.  Now  it  is  quite 
clear  that  if  the  correction  of  rates  is  attempted  by  the  in- 
direct method  of  injunction  the  court  must  prescribe  the  rule 
of  conduct — name  the  correct  rate,  directly  or  indirectly — and 
thus  invade  the  legislative  department  by  making  the  law  which 
it  is  called  upon  to  enforce.  If,  as  conceded  this  power  cannot 
be  directly  conferred  upon  the  courts  should  it  be  done  indi- 
rectly? In  the  multitude  of  courts  where  each  fixes  a  rate  as 
it  might  be  inclined,  there  would  arise  such  confusion  as  has 
been  frequently  suggested  would  arise  from  jury  verdicts  giving 
damages  for  excessive  rates  each  with  a  standard  of  its  own. 
But  apart  from  that,  it  was  never  intended  by  the  framers  of 
the  Constitution  that  the  judiciary  should  fix  the  rule  of  con- 
duct and  by  holding  one  in  contempt  who  should  violate  it,  ex- 
ercise the  prerogative  of  kings,  nor  that  any  person  should  be 
required  to  look  to  the  courts  to  make  the  law.  The  power  of 
preventive  relief  by  injunction  should  be  limited  to  the  en- 
forcement and  protection  of  rights  prescribed  by  law.  It  is 
up  to  Congress  to  prescribe  through  a  Commission  the  rates  in 
lieu  of  unlawful  ones. 


133 


A  COMMISSION  TO  PROSECUTE  INVESTIGATIONS  AND  ENFORCE  THE 

LAW,    THE    ONLY    REMEDY. 

Another  proposition  apparently  plausible,  earnestly  believed 
by  some,  but  really  intended  to  render  ineffective  any  law 
giving  the  Commission  the  power  to  correct  rates,  is  to  take 
away  from  the  Commission  the  power  of  investigation  and  vest 
that  somewhere — nobody  seems  to  Imow  where;  or,  leaving  the 
Commission  to  investigate,  take  away  the  power  to  decide  and 
require  it  to  go  into  court  in  the  first  instance.  It  is  the  sub- 
ject of  complaint  that  the  Commission  must  and  does  stand 
in  the  attitude  of  a  prosecutor  and,  therefore,  cannot  be  fair 
as  a  tribunal  which  also  is  to  determine  what  it  will  do.  If 
the  complaint  were  true  in  the  broad  terms  presented — that  is, 
that  the  Commission  is  a  prosecutor,  there  might  be  cogency 
to  the  objection,  but  it  is  not  true  in  the  broad  sense  to  which 
the  criticism  is  urged.  Any  Commission  which  does  not  in- 
vestigate as  a  matter  of  course  must  act  without  investigation 
or  not  act  at  all.  When  a  complaint  is  filed  it  determines 
whether  it  will  investigate  the  charges.  If  it  determines  to  do 
so  the  parties  are  notified,  witnesses  are  heard,  arguments  made 
and  thereafter  the  Commission  decides  the  matter.  Anything 
less  than  that  would  make  the  Commission  a  farce,  which  seems 
not  objectionable  to  many  of  those  who  oppose  giving  it  any 
power.  While  it  may  be  said  that  the  Commission  has  itself 
suggested  that  it  be  relieved  of  all  prosecuting  feature,  it  un- 
doubtedly was  not  thereby  meant  that  the  Commission  could 
be  relieved  from  the  duty  of  determining  what  complaints  jus- 
tify an  investigation  and  to  investigate  where  probable  grounds 
exist,  in  order  to  properly  perform  the  duty  of  ascertaining 
whether  the  law  is  being  violated,  and  if  so  to  correct  jt  by 
prescribing  a  proper  rate.  The  very  power  to  correct  the  rates 
which  they  favor  implies  that  as  a  condition  precedent  to  its 
proper  exercise  the  investigation  shall  be  made;  indeed,  the 
terms  of  every  proposed  bill  predicates  the  exercise  of  the  power 
upon  the  investigation.  Take  it  away  and  the  Commission  is 
perfectly  helpless  and  equally  useless.  It  has  also  been  sug- 
gested that  a  lot  of  the  duties  of  the  Commission  be  bestowed 
on  other  departments,  like  the  statistical  work,  the  special  in- 
vestigations of  agents  to  discover  violations  of  the  law  against 
rel)ates  and  discriminations  and  violations  of  the  safety  ap- 
pliance laws,  etc.  If  that  is  done,  so  that  the  Commission  has 
no  responsibility  in  the  matter,  it  will  greatly  weaken  the  law. 
While  it  may  be  that  there  should  be  a  bureau  established  to 
specially  give  these  matters  immediate  attention,  yet  it  should 
report  to  the  Commission  and  be  under  its  supervision  in  a 
general  sense,  so  as  to  have  one  responsible  head  for  the  en- 
forcement of  the  Interstate  Commerce  Act,  and  that  head  the 


133 

Conimissiou.  Divide  it,  and  the  failures  to  enforce  the  law 
arising  from  jealousies  and  controversies  of  officials  will  be 
so  common  as  to  be  disgraceful  and  the  failures  of  duty  on  the 
part  of  one  department  will  be  laid  at  the  door  of  another. 
Manifestly  if  the  law  is  to  be  executed,  such  division  of  duty 
and  responsibility  must  be  avoided. 

It  follows  therefore  that  neither  from  a  practical  standpoint 
nor  from  the  standpoint  of  constitutional  limitations  can  the 
remedy  be  given  to  the  courts  as  a  matter  of  original  or  ap- 
pellate jurisdiction  to  correct  a  rate  for  the  future  where  it  in- 
volves a  change  in  the  rate;  nor  can  it  be  divided  up  and  par- 
celed out  between  Commission,  courts  and  bureaus.  That  this 
is  the  concensus  of  opinion  is  proven  by  the  fact  that  regu- 
lation of  rates  which  is  worthy  of  the  name,  by  the  various 
states,  has  uniformly  been  through  legislative  action,  either  di- 
rectly or  through  the  medium  and  agency  of  a  Commission. 
Such  regiilation  where  effective  naturally  provokes  railroad  op- 
position and  criticism.  When  one  considers  that  there  is  no 
rule  yet  discovered  by  anyone — traffic  man,  Commission,  or  court 
— for  fixing  a  just,  fair  and  reasonable  rate  on  any  given  thing, 
between  any  given  points,  except  the  mere,  arbitrary  exercise 
of  judgment — enlightened,  honest  judgment  though  it  be — how 
is  it  possible  that  rates  can  be  regulated  by  law  except  by  the 
exercise  of  legislative  will,  either  directly  or  through  a  Com- 
mission. Once  for  all  let  it  be  understood  that  the  public  may 
not  expect  that  the  railroads  which  are  the  subject  of  a  pro- 
posed regulation  which  they  oppose,  or  those  who  receive  their 
inspiration  from  them,  will  suggest  a  plan  to  effectuate  an 
efficient  remedy  to  be  applied  against  them;  therefore.  Congress 
should  act  with  great  caution  when  it  comes  to  adopting  the 
railroads'  remedy  lest  a  mere  shadow  be  chosen  for  the  sub- 
stance.    "Beware  of  the  Greeks  bearing  gifts." 

ACCUSATIONS  AGAINST   THE   COMMISSION   IRRELEVANT. 

While  it  is  scarcely  competent  for  the  accused  to  insist  that 
a  tribunal  established  to  try  the  fact  of  his  guilt  should  not 
be  given  the  power  to  remedy  the  wrong,  if  found  to  exist,  on  the 
ground  that  such  tribunal  has  not  enforced  the  law  in  other 
particulars,  yet  waiving  the  inadmissibility  of  this  objection, 
if  the  Commission  is  incompetent  or  has  failed  to  perform  its 
duty  as  charged,  let  these  charges  be  made  specific  and  let  the 
Commission  be  tried  and  if  found  derelict  be  removed  from 
office,  and  if  this  be  true  let  us  have  one  that  is  competent  and 
that  will  enforce  the  law.  But  if  the  failure  to  enforce  the  law 
arises,  not  from  dereliction  of  duty,  but  from  a  want  of  power 
to  enforce  it,  then  let  that  power  be  conferred.  Without  doubt 
the  law  against  unreasonable  rates  and  unjust  discriminations 
has  not  been  enforced  to  any  great  extent,  and  the  records  of 


134 

the  courts  can  be  pointed  to  in  proof  of  this  to  the  same  ex- 
tent as  the  records  of  the  Commission ;  it  is  as  much  an  indict- 
ment of  the  one  as  the  other,  and  groundless  as  to  both.     And 
why?     Simply  because  in  neither  case  has  the  law  provided 
an   adequate   remedy.     Hence  these  wholesale   and   unfounded 
accusations    against    the    Commission,    and    arguments    based 
thereon  are  wholly  without  force.     Indeed,  the  very  basis  of 
criticisms  vanish  when  it  is  observed  that  those  who  make  them 
— the  railroads  and  railroad  apologists — also  deny  violating  the 
law  and  contend  that  rates  are  not  too  high  and  proclaim  that 
there  is  no  complaint  of  unreasonable  rates;  that  rates  are  de- 
clining and  will  be  lower  if  railroads  are  left  free  and  unmo- 
lested than  if  fixed  by  the  Commission;  that  rebates  and  dis- 
criminations  are   things   of  the   past;  that  the   railroads  have 
complied  with  a  very  large  per  cent,  of  the  Commission's  or- 
ders, and,  therefore,  there  is  no  necessity  for  a  remedy  to  en- 
force them;  that  if  the  power  over  rates  be  conferred  upon  the 
Commission,  railroad  values  and  the  value  of  stocks  and  bonds 
will  be  so  reduced  that  widows  and  orphans  will  be  brought  to 
penury  and  want,  and  that  investors  generally  will  be  ruined; 
that  the  Commission  will  upset  and  remake  all  of  the  rates  in 
the  country,  and  that  railroad  earnings  will  be  so  reduced  that 
all  sorts  of  ruin  will  follow;  that  railroad  construction  and  de- 
velopment will  be  retarded  and  the  wages  of  railroad  employes 
reduced.     All  of  this  and  a  great  deal  more,  it  is  predicted,  will 
result  from  the  activity  of  the  Commission  and  the  enforcement 
of  the  law  if  it  is  given  the  poiver  to  do  it.     It  is  quite  apparent 
from  these  expressed  fears  that  the  roads  realize  that  their  rates 
will  often  be  found  too  high  and  to  work  unjust  discrimina- 
tion, if  the  determination  of  those  questions  should  be  left  to 
a  Commission  which  has  the  power  to  act  and  to  fix  instead  such 
rates  as  are  just,   fair  and  reasonable.      So  that,  at  last,   it 
amounts  to  an  admission  that  if  this  power  be  conferred  upon 
the  Commission,  the  railroads  at  least  expect  that  it  will  be  ex- 
ercised with  diligence  and  that  the  law  will  be  enforced,  result- 
ing in  all  this  ruin,  for  it  is  the  enforcement  of  the  law  which 
they  fear,  and  that    is  exactly  what  the  public  wants.     Thus  in 
the  multitude  of  contentions  made  they  have  so  oifset  one  with 
another  and  have  suggested  so  many  inconsistent  reasons  in  sup- 
port of  the  various  contentions  which  they  have  made,  that  the 
net  result  of  it  all  amounts  to  an  acquittal  of  the  Commission 
of  the  very  charges  which  they  make  and  to  a  confession  that 
it  is  a  simple  want  of  power,  which,  if  conferred  upon  the  Com- 
mission, will  transform  it  from  a  body  of  inaction,  derelict  as 
they  claim  in  the  enforcement  of  the  law,  to  one  of  activity 
in  the  eifective  enforcement  of  the  law.     The  logic  of  the  rail- 
roads' contentions,  therefore,  when  reduced  to  a  last  analysis. 


135 

supports  precisely  what  those  who  favor  amending  the  law 
claim;  that  is,  that  without  the  power  to  change  a  rate  the 
Commission  is  impotent,  and  there  can  be  no  remedy,  but  with 
it  the  law  will  be  enforced.  The  remedy  demanded  is  in  be- 
half of  the  shipper,  and  the  real  point  of  difference  is  that 
the  railroads  very  naturally  don't  want  the  shipper  to  have  it. 
Since,  therefore,  it  is  the  po'wer  which  is  needed  to  work  this 
transformation,  by  all  means  let  that  remedy  be  provided.  The 
question  then  is : — 

WHAT    SHALL    THE    REMEDY    BE? 

The  law  now  prohibits  unreasonable  and  unjustly  discrim- 
inatory rates,  but  the  law  is  'for  practical  purposes,  unenforc- 
able  for  want  of  power  anywhere  to  determine  and  fix  for  the 
future  a  reasonable  and  just  rate.  Full  machinery  exists  under 
the  present  law  in  the  Commission  to  investigate  and  find  the 
fact  of  unreasonable  or  unjustly  discriminatory  rates,  but  the 
defect  lies  in  acting  upon  that  finding  by  fixing  the  rate  to  take 
the  place  of  an  unlawful  one.  Manifestly  the  remedy  should 
merely  cure  the  defect.  Give  the  Commission  power  to  pre- 
scribe for  the  future,  to  take  effect  promptly,  the  lawful  rate, 
regulation  or  practice  to  apply  instead  of  that  found  to  be  un- 
lawful, and  bring  all  interstate  shipments,  facilities  and  charges 
within  the  purview  of  the  law,  with  penalties  for  non-observ- 
ance while  in  effect.  The  government  thus  by  legislative  and 
administrative  agency  affords  to  the  public  a  speedy  and  ade- 
quate remedy  at  government  expense,  which  is  the  government's 
duty,  whether  the  railroads  want  it  or  not.  There  is  nothing 
new  in  the  principle  or  practice,  as  is  a  matter  of  common 
knowledge  in  many  states. 

If  this  is  done,  there  need  be  no  fear  that  legitimate  railway 
earnings  will  be  interfered  with.  There  will  be  no  danger 
of  anything  approaching  confiscatory  rates,  and  there  is  not 
the  slightest  reason  to  expect  it;  if  it  should  be  attempted  the 
present  remedy  by  injunction  is  clear  and  ample.  The  very 
ground  of  the  shipper's  demand  for  a  remedy  is  that  the  rail- 
roads themselves  may  not  possess  the  confiscatory  power  over 
his  business.  A  fair  arbitration  can  be  thus  provided.  It  is 
the  only  feasible  remedy.  What  objection  can  there  be  to  it, 
except  the  selfish  one  that  the  railroads  do  not  want  it  be- 
cause they  want  no  remedy,  for  this  would  result  from  attempt- 
ing an  elaborate  scheme  to  litigate  into  effect  a  rate.  It  is  a 
delusion  and  snare  prepared  for  the  unwary." 

Mr.  A.  E.  McKenzie  then  addressed  the  Convention  upon  the 
subject  of  interchangeable  mileage. 


136 

The  Chairman:  "Gentlemen,  of  the  Convention:  Mr. 
"R.  W.  Higbic  sends  this  dispatch  to  the  Chair:" 

"Spokane,,  Wash.,  Oct.  27,  1905. 

li.  W.  Ifif/hic,  Chairman  Interstate  Comincrce  Law  Convention: 
Spokane  Chamlier  of  Commerce  sends  greetings  and  consent 
of  a  half  million  people  in  (Columbia  TJiver  Basin  to  represent 
them  in  your  fight  for  regulation  of  freight  rates  as  advocated 
by  President  Eoosevelt.  This  Association  is  entitled  to  three 
votes.  If  proxies  are  allowed,  vote  for  ns.  Congratulations  on 
your  stand  against  railroad  domination.  The  people  pity  the 
misguided,  and  abhor  hirelings. 

(Signed)   F.  E.  Goodall,  President. 
L.  G.  Monroe,  Secretary." 

The  Chairman  :  "The  Chair  has  just  received  the  follow- 
ing from  San  Francisco:" 

"Chdiniian  Interstate  Commerce  Law  Convention.  Steini'-m/ 
II  all: 
We  desire  to  inform  you  that  our  only  representative  is  j\Ir. 
William  E.  Wheeler,  who  has  forwarded  his  credentials  to  My. 
E.  P.  Bacon.  The  statement  in  the  daily  press  that  other  par- 
ties are  representing  the  Chamber  of  Commerce  of  San  Francisco 
is  not  correct. 

(Signed)  A.  ISTewhall,  President." 

Judge  S.  H.  Cowan  :  "As  a  closing  vote  of  thanks  publicly 
offered,  I  move  that  it  is  the  sense  of  this  Convention  that  tlie 
l)rcss  of  this  city  is  entitled  to  the  thanks  of  the  Convention,  for 
the  fair  and  faithful  manner  in  which  it  has  reported  its  pro- 
ceedings." 

The  motion  prevailed. 

Mr.  J.  Farley:  "If  passengers  are  on  a  ship  and  they  find 
the  ship  getting  into  very  troublous  yvaters,  and  breakers  ahead, 
and  they  know  that  the  captain  is  a  man  of  experience,  ability, 
coolness  and  determination,  they  feel  very  much  encouraged  and 
therefore  very  safe.  When  we  arrived  here  last  Wednesday  and 
the  Executive  Committee  met  and  some  gentlemen  were  honored 
with  an  invitation  to  meet  with  them,  of  which  I  was  one,  they 
found  that  they  had  unquestioned  proof  before  them  that  they 
were  getting  into  troubled  waters,  with  storms  ahead  and  a  lee 


137 

shore  aiul  breakers.  Then  it  became  iin|tortant — extremely  im- 
portant, to  find  men  for  temporary  Chairman  and  permanent 
Chairman  of  tliis  Convention,  who  were  men  of  experience,  of 
ability,  who  were  cool  and  determined.  As  far  as  we  from  Texas 
were  concerned,  we  l-;new  one  tlial  Colorado  sort  of  claimed,  but 
we  claim  him.  too,  whom  we  thought  was  the  man  of  the  United 
States  for  that  place,  and  I  want  to  thank  this  Convention  for 
giving  liim  to  us  as  permanent  Chairman." 

Till-:  ( 'iiAiu.AiAX  :  "(Jcntlemcn.  tlie  imur  fixed  for  adjourii- 
ment  is  long  past.  As  there  is  nothing  further  to  come  before 
the  ConNcntion.  the  Chairman  dccUires  the  uieeting  adjourned 
sine  (lie. 


:\[EETJXC  OF  THK  EXECUTIVE  COMMITTEE. 

A  meeting  of  the  Executive  Comuiittee  was  held  immediatelv 
upon  the  adjournment  of  tlie  Interstate  Commerce  Law  Conven- 
tion on  October  27,  190.3.  at  whicli  the  following  permanent  offi- 
cers were  elected:  E.  1*.  Bacon,  Milwaukee,  Wis.,  Chairman; 
J.  E.  Howard,  Wichita.  Kan..  A'ice  Chairman;  R.  S.  Lyon, 
Chicago,  UL.  Treasurer. 

Tlie  following  committee  was  appointed  to  call  on  President 
Eoosevelt  and  present  to  hiui  the  resolutions  adopted  by  the  Con- 
vention:  E.  1\  Bacon,  Chairman;  Joseph  H.  Call,  S.  B.  Bur- 
nett, E.  W.  Higbie  and  S.  U.  Cnwan. 

A  motion  was  adopted  tliat  a  representative  of  the  Executive 
Committee  be  appointed  J'oi-  each  state  and  territory  in  the 
Union,  for  the  })ur]iose  of  co-operating  in  carrying  on  the  work 
of  the  committee  in  their  respective  states. 

The  committee  subsc(piently  engaged  the  services  of  ]\Ir. 
Frank  Barry,  of  Milwaukee,  Wis.,  as  permanent  Secretary  and 
representative  of  the  committee  at  Washington,  D.  C. 


INDEX. 


Address,  bv —  Page. 

Bash,  C.  S 77 

Call,  J.   H 6(5,    80 

Campbell,  F.    T 4 

Cowan,  S.  H 1,  119 

Dougherty,  J.   S 72 

Dunne,   Mayor 2 

Frear.  J.  A 50 

Gardiner,   S.   W 115 

Higbie,  R.   W 2 

Hoile,  J.  T 76 

Hughes,   W.    E 44 

.  Ittner,  Anthony 78 

Kern,  J.  W 10 

Kindel,  G.  J 63 

Larrabee,  William 80,  112 

Mackenzie.   Murdo   61 

McKenzie,   A.   E 135 

Rosewater,   Edward  99 

Stillwell,  W.  B 79 

Teal,  K.  Z 75 

Van  Sant,  S.  R 13,     71 

Associations  represented   , 25 

Babcock,  F.  R 13,    41 

Bacon,  Edward  P 1,  8,  23,  61,  85,  137 

Ballard.  T.  R 41,  77,    84 

Bartlett,  W.  H 84 

Bash,  C.  S 77 

Bode,   Frederick    83 

Branch.    E.    B 83 

Bray,    f,   J 41 

Bridge,   G.    S 83 

Buel,  M.  P 13,  41,  43,  47,  49,     59 

Burkholder,   E.   R 83 

Burnett,  S.  B 84,  137 

Call  for  the  Convention 8 

Call,  J.  H 47,  48,  49,  66,  83,  85,  86,  119,  137 

Campbell,  Frank  T 4,  48,  62 

Chamberlain,   W.    1 74 

Chandler,  William  E -. 10 

Committee — Executive 42,  48,  85,  137 

on  Credentials 9,   13,  24 

"     Finance    60,  82 

"     Permanent  Organization 9,12,  42 

'"          "     Resolutions 42,47,60,66,  86 

—Special    49,  85 

Conger,  E.  D 13,  41 

Congressional   Districts   represented 39 

Contributions  to  Expense  Fund 83 

Cowan,  Judge  S.  H 1,  12,  23,  42,  47,  48,  49,  60,  82,  85,  119,  136,  137 

Credentials   9,  13,  24 

Daish,  J.  B 49 

Declaration  of  Principles 23,  25 

Delegates  present 25 

Donations  to  Expense  Fund 83 


139 

Page. 

Dougherty.  J.  S 72,  85,  1  IP 

Dunne,  Mayor,  Greeting 2 

Eaglesfield,  J.  T 84 

Eastman,  Gardiner  &  Co 84 

Edwards,  J.   S 83 

Esbjornson,  J 84 

Executive  Committee  42,  137 

Expense  Fund  83 

Farley,  J.  A. 12,  47,  61,  77,  85,  136 

Finance  Committee  60,  82 

Frear,  James  A 8,  50 

Funds,  Donation  of 83 

Gardinier,  G.  S 85 

Gardiner,  S.  W r 83,  84,  86,  115 

George,  J.   S 84 

Gillham,  R.  P 84 

Gray,  T.  A 13 

Greeting  by  Mayor  Dunne  of  Chicago , 2 

Harris,  W.  A 43,  47 

Higbie,  R.  W 2.  47,  83,  85,  119,  136,  137 

Hoile,  J.  T 76 

Holmes,  H.   A 47,  83 

Howard,  J.  E 13.  25,  41,  84,  85,  137 

Hughes,  W.  E 43,  44,  77,  84,  85,  119 

Humphrey,  I.  M 41 

Invocation 47 

Ittner,  Anthony 78,  83,  84 

Johnston,  J.  H 13,  41,  84 

Kahle,  J.  W 41,  85 

Keel,  J.  Z 41,  84 

Kern,  John  W 8,  10.  47.  59,  77,  84,  85,  86 

Kernan,  J.  D 41,  49,  84 

Kenyon,  C.  A 41 

Kindel,  G.  J 63,  84 

Kinney,  T.  L 41 

Krotter,  William    84 

Larrabee,  William. 47,  80,  85,  86,  112 

Laverty,  Jay 41 

Loftus,  G.  S 41 

Lyon,  R.  S 63,  84,  85,  137 

Mackenzie,  Murdo 61,  63,  82,  83,  84,  85 

McCord,  J.  W 41,  84 

McHugh,  J.  T 63 

McKenzie,  A.  E 83,  135 

Magdeburg,  F.  H 83,  85 

Maroney,  James   84 

Mason,  J.  M 63,  85 

Messerole,  C.  G 84 

Moore,  S.  W 41 

Mueller  Adolph 85 

Mueller,  G.  W 47 

National  and  Sectional  organizations  represented 25 

Newill,  W.   E 84 

Notification  to  President 85 


140 

Page. 

Order  of  Business 42 

Organizations  represented  25 

Othmer,  Henry  83 

Permanent  Chairman   'l- 

Permanent  Organization 9,   12,  42 

Perry,  E.  F 12 

Pike,  E.  B ^1.  ^ 

Proxies  sent '^T 

Reed,  E.  H 41 

Representatives  present   25 

Resolutions  adopted — 

Regarding  absence  of  Chairman  E.  P.  Bacon 23 

Regarding  Studebaker   Hall   Convention 60 

Report  of  Committee  on 66 

■'    Finance  Committee 82 

To  Notify  the  President 85 

Thanks  to  Chairman  of  Executive  Committee S6 

Thanks  to  Chairmen  and  Secretaries 119 

Thanks  to   Press 136 

Robbins.  W.  C."B , 41 

Robinson,  C.  W 12,  84 

Rosencranz,  A.   C •  84 

Rosewater,   Edward    86,  99 

Rumsey,  1.   P 13,  41 

Sessions  :  First.       Thursday  a.  m.,  Oct.  20 1 

Second,           "           i'.  m.,      '"      "' 24 

Third,      Friday,       .\..  m.,      "     27 61 

Fourth.        "            V.  M..      '■      " 119 

Seybt,  C.  H 85 

Shiefe.  D.  F. 84 

Simp,son  D,   W 84 

Slade,  L.  C 13,  41,  49,  85 

State  and  Local  Organizations  represented 27 

State  Representatives  86,  137 

Stewart,  F.   M : 84 

Stillwell,  W.  B 12,  79,  84,  85 

Stinson,  J.   \" 84 

Storv.  F.  Q 13,  41,  63,  83 

Stubbs,  C.   E 41 

Studebaker  Hall   Convention 48,  59 

Summary  of  Organizations  and  Districts  represented 40-41 

Teal,  K.  Z.  . . 75 

Telegrams  received 10,  136 

Temple,  J.  S 83 

Temporary  Chairman,  R.   W.   Higbie 2 

Van  Hoose,  J.  A 23 

Van  Luven,  E.  F 83 

Van  Sant,  S.  R 8,  13,  71,  81 

Verdery,  E.  F 41 

Wagner,  F.  E 83 

Waldron,  E.  P 47,  65 

Waymer,  F.  E 41,  83 

Wells,    J.    W 84 

West,  R.  H 12,  85,  119 

Weston,  (S.  Dak.)   Chamber  of  Commerce 84 

Whiteworth,  G.  A 75 

Whitney,  L.  C 41 

Wilder,  J.   E 84 


AMENDMENT 


OF  THE 


Interstate  Commerce  Law 


/^^ 


EXTRACTS  FROM  THE 

Report  of  the  Industrial  Commission 

ON  TRANSPORTATION 

SUBMITTED  TO  THE 

FIFTY-SEVENTH   CONGRESS 


PUBLISHED  BY  THE 

EXECUTIVE  COMMITTEE  OF  THE 

INTERSTATE   COMMERCE   LAW  CONVENTION 


MV 


L.I3RARV 

EXTRACTS  FROM  THE 

REPORT  OF  THE  INDUSTRIAL  COMMISSION 

ON   TRANSPORTATION. 

SUBMITTED  TO   THE    FIFTY-SEVENTH    CONGRESS. 


The  Industrial  Commission  appointed  by  the  President  pursuant  to 
a  joint  resolution  of  the  United  States  Congress,  composed  of  four 
members  of  the  Senate,  four  members  of  the  House  of  Representatives, 
and  ten  prominent  citizens,  and  charged  with  the  duty  of  investigating 
and  reporting  upon  the  industrial  conditions  of  the  country,  after  be- 
tween three  and  four  j^ears  of  exhaustive  hearings  and  investigation, 
rendered  a  report  to  the  Congress  in  February,  1902,  which  was  par- 
ticularly comprehensive  with  regard  to  the  subject  of  transportation. 

The  legislation  which  is  earnestly  desired  and  advocated  by  the 
commercial  and  industrial  organizations  allied  with  the  Interstate 
Commerce  Law  Convention,  contained  in  the  measure  now  pending 
before  Congress,  known  as  the  Cooper- Quarles  Bill  (H.  R.  6273  and 
S.  2439),  coincides  with  the  recommendations  made  by  the  Industrial 
Commission,  though  it  does  not  comprise  all  of  the  recommendations 
made  by  that  Commission.  It  has  been  deemed  best  to  restrict  the 
bill  to  such  provisions  as  seem  absolutely  essential  for  giving  effective- 
ness to  the  primary  requirement  of  the  Act  to  Regulate  Commerce — 
namely,  that  "  all  charges  made  for  any  service  rendered  or  to  be 
rendered  in  the  transportation  of  passengers  or  property,  or  in  connec- 
tion therewith,  shall  be  reasonable  and  just,"  the  only  means  for  the 
enforcement  of  which,  in  the  present  state  of  the  law,  being  the  provision 
that  the  Interstate  Commerce  Commission  shall  notify  any  common 
carrier,  found  guilty  of  a  violation  of  the  law,  "  to  cease  and  desist 
from  such  violation,"  leaving  the  carrier  entirely  free  to  make  such 
modification  in  the  rate  or  practice,  found  to  be  unjust  or  unreason- 
able, as  it  may  see  fit. 

The  following  extracts  from  the  report  of  the  Industrial  Commission 
on  Transportation  clearly  indicate  the  necessity  of  prompt  action  by 
Congress  in  the  direction  of  the  remedial  legislation  sought : 

COMPARISON  OF  LOCAL  AND  THROUGH  RATES. 

The  assertion  is  frequently  made  that,  while  there  has  been  un- 
doubtedly a  progressive  decrease  in  freight  rates  in  the  United 

1a 


states  during  the  last  thirty  years,  these  decreases  have  been  very 
unequally  distributed.  lu  other  words,  it  has  beeu  maintained  that 
the  decreased  rates  have  been  entirely  abnormal  upon  the  through 
business  from  interior  centers,  such  as  the  movement  of  grain  or 
other  food  supplies  from  Chicago  to  the  seaboard ;  but  that,  on  the 
other  hand,  local  rates  have  decreased  very  little,  if  -at  all,  in  the 
same  period.  Coupled  with  this  is  the  allegation  that  while  through 
freight  rates  in  the  United  States  are  lower  than  in  foreign  coun- 
tries, local  rates  for  short  distances  are,  as  a  matter  of  fact,  consid- 
erably above  those  prevailing  in  Europe.  This  allegation  if  true  is  of 
profound  significance,  owing  to  the  fact  that  the  larger  proportion 
of  freight  business  throughout  the  country  is  of  a  local  character. 
Thus,  for  instance,  the  annual  report  for  1899  of  the  New  York  Cen- 
tral indicates  about  4,000,000  tons  of  through  freight  in  both  direc- 
tions as  against  five  times  that  volume  of  way  freight  in  both  direc- 
tions. On  the  Pennsylvania  road  it  appears  that  the  proportion  of 
local  freight  was  even  higher,  rising  to  90  per  cent,  in  1890.  On  the 
Illinois  Central  for  1900  local  freight  outweighs  through  freight  in 
the  proportion  of  5  to  1.  some  84  per  cent,  of  the  freight  carried  be- 
ing of  a  local  character.  On  the  other  hand  on  some  roads — such  as 
the  Chesapeake  and  Ohio,  for  instance — the  opposite  extreme  is 
found,  competitive  freight  constituting  about  four-fifths  of  the  total. 
It  is  certain  that  the  definition  of  local  as  distinct  from  through 
freight  differs  upon  various  systems.  On  the  other  hand,  while  the 
volume  is  greater,  actual  earnings  on  through  business  vastly  pre- 
ponderate. Fewer  tons  are  moved,  but  the  distances  are  so  much 
greater  that  the  total  charge  on  each  ton  aggregates  a  larger 
amount.  Thus  on  the  New  York  Central  road  through  freight  earn- 
ings outweighed  the  way  business  from  a  revenue  point  of  view 
three  times  over.  Through  ton  mileage  aggregated  nearly  eight 
times  that  of  local  traffic,  although  at  a  ton-mile  revenue  of  consid- 
erably less  than  half.  The  only  point  to  be  established  here  is  that 
local  freight  rates  are  of  great  importance,  both  to  the  public  from 
the  point  of  view  of  rates  and  to  the  railroads  from  the  point  of 
view  of  revenue. 

The  trend  of  testimony  appears  to  be  that  such  local  rates  have 
decreased  very  unevenly  in  different  parts  of  the  country.  Appar- 
ently one  of  the  first  and  most  beneficent  results  of  the  enactment 
of  the  act  to  regulate  commerce,  in  1887,  was  a  reduction  of  local 
rates  in  various  parts  of  the  country,  in  order  to  bring  the  rate  ad- 
justment into  conformity  with  the  long  and  short  haul  clause.  This 
was  peculiarly  the  case  in  the  Northeastern  or  trunk-line  territory. 
It  does  not  seem  to  have  occurred  in  the  Southern  States,  where 
the  long  and  short  haul  principle  has  never  been  accepted  in  its 
fe-ntirety.  The  most  comprehensive  report  upon  the  subject  con- 
cludes that  local  rates  have  in  various  parts  of  the  country,  during 
the  last  ten  or  fifteen  years,  been  reduced  from  10  to  50  per  cent. 
Returns  from  various  State  railroad  commissions  interrogated  by 
the  Industrial  Commission  upon  the  subject  show  highly  variable 
results.  From  Mississippi  it  appears  that  "local  freight  rates  in 
this    State  have  been  materially  lowered  in  the  last    four    years, 


especially  in  the  lettered  classes,"  while  from  the  adjoining  State 
of  Alabama  it  appears  that  ''local  rates  on  freight  have  decreased 
very  little  in  the  last  five  or  six  years,  and  have  not  decreased  in 
proportion  to  the  decrease  made  in  interstate  rates."  In  New  Eng- 
land comparison  of  actual  freight  rates  does  not  indicate  any  very 
considerable  reduction,  the  absence  of  competition  in  this  section 
being,  perhaps,  in  part  responsible  for  this  result.  A  comparison 
of  published  freight  rates  in  Southern  territory,  without  making  al- 
lowance for  departures  from  such  tariffs,  apparently  shows  a  very 
much  smaller  reduction  than  in  other  parts  of  the  country.  It  is 
also  apparently  true  that  the  reduction  of  cotton  rates  in  this  sec- 
tion, while  considerable,  has  been  much  less  rapid  than  that  of  the 
rates  upon  grain  from  Chicago  to  the  seaboard  in  either  direction. 

SUMMARY. 

Summarizing,  we  may  conclude  that  during  the  period  from 
1870  to  1000,  on  the  whole,  a  substantial  and  very  widespread  reduc- 
tion of  freight  rates  has  taken  place.  This,  as  might  be  expected, 
has  been  far  less  marked  in  local  than  in  through  or  competitive 
business.  This  steady  downward  movement  of  freight  rates  has  ap- 
parently been  interrupted  but  once  by  any  attempt  at  a  general  ad- 
vance of  rates.  The  railroads  of  the  country  in  1894  evinced  a  con- 
certed disposition  to  increase  freight  rates,  apparently  to  compen- 
sate for  the  depressed  condition  of  the  industry  as  a  whole.  The 
times,  however,  did  not  warrant  such  action  and  it  apparently  did 
not  operate  to  prevent  the  continued  fall  in  the  average  revenue 
per  ton-mile.  It  remained  for  the  prosperous  times  of  1900  and 
1901  to  invite  once  more  such  action  on  their  part,  and  a  notable 
increase  in  freight  rates  all  along  the  line  has  followed  as  a  result. 

THE    GENERAL    FREIGHT    RATE    ADVANCES    BY    MEANS    OF 

CLASSIFICATION  CHANGES. 

The  long  continued  and  steady  decline  of  freight  rates  since  the 
civil  war  has  given  way  in  1900  to  a  marked  advance  in  the  pub- 
lished rates.  No  similar  attempt,  with  the  exception,  perhaps,  of 
the  year  1891,  has  been  made  to  arrest,  by  concerted  action  of  all 
the  roads  of  the  country,  this  progressive  decline,  due  to  a  consider- 
able degree,  as  it  has  appeared,  to  competition  between  the  rail- 
roads themselves.  The  peculiarity  of  these  advances  of  1900  is  that 
they  have  been  made,  not  by  direct  changes  of  tariffs,  but  by  modi- 
fication of  the  freight  classifications.  Merchandise,  as  is  well 
known,  is  thrown  into  various  classes  according  to  its  value,  bulk, 
risk,  etc.,  and  the  charges  are  graded  accordingly.  Consequently 
the  transfer  of  a  particular  commodity  from  one  class  to  another 
may  operate  materially  to  increase  the  rate  of  freight  charge.  Thus, 
for  instance,  the  freight  rate  from  New  York  to  Atlanta  by  any 
all-rail  line  is  fixed  by  common  agreement  at  |1.14  per  100  pounds. 
The  rate  on  second  class  is  98.  on  third  class  86,  on  fourth  class  73. 
etc.  It  is  apparent  that  if  goods,  axes  for  example,  which  were 
formerly  fourth  class,  are  by  a  change  in  classification  made  third 


class,  this  operates  to  increase  the  rates  between  these  points  speci- 
fied from  73  to  86  cents.  Moreover,  since  these  classifications,  as 
will  be  shown  later  in  this  report,  are  agreed  upon  by  all  railroads 
operating  within  each  specified  territory,  a  change  of  classification 
operates  simultaneously  to  increase  rates  throughout  the  entire  sec- 
tion. The  same  result  may  be  attained  also  by  changing  classifica- 
tion according  as  the  goods  are  shipped  in  car  loads  or  less  than  car- 
load lots.  Thus,  if  a  commodity  was  formerly  classified  as  fourth 
class  when  shipped  in  car  loads,  and  as  third  when  in  less  than  car- 
load lots;  if  the  distinction  between  these  two  classes  of  shipment 
be  removed  and  all  are  classified  as  third,  whether  in  large  or  small 
quantity;  this  likewise  results  in  an  increase  of  the  freight  rate  to 
the  large  shipper  by  the  difference  in  the  rate  between  third  and 
fourth  class.  Or,  again,  as  will  be  shown,  certain  commodities  are 
sometimes  exempted  from  classification  by  a  special  or  ''commodity" 
rate,  as  it  is  called.  This  commodity  rate  is  usually  very  much  be-~ 
low  the  rate  for  classified  merchandise.  Thus  corn  by  the  Official 
Classification  is  sixth  class,  and  the  rate  from  Chicago  to  New  York 
for  that  class  is  25  cents.  If,  however,  corn  actually  moves  under 
a  commodity  rate  of  17^  cents  per  100  pounds,  the  cancellation  of 
the  commodity  rate  immediately  operates  to  put  corn  in  class  six, 
thereby  raising  the  rate  to  2.5  cents. 

SUMMARY  OF  CHANGES. 

The  general  advance  of  1900  was  inaugurated  by  the  trunk  lines 
operating  north  of  the  Ohio  Eiver.  On  January  1,  1900,  notice  was 
given  that  a  new  classification,  known  as  ''Official  Classification  No. 
20,"  was  to  supersede  No.  19.  An  investigation  made  by  the  Inter- 
state Commerce  Commission  showed  that  824  changes  were  made 
by  this  action,  of  which  818  produced  an  advance,  and  6  a  reduction 
in  the  rate.  The  following  table  shows  the  distribution  of  these 
advances : 

ADVANCES. 

Per  cent. 

434  ratings  advanced  42.8 

214  ratings  advanced 30 

100  ratings  advanced 20 

32  ratings  advanced  15.3 

17  ratings  advanced  16.6 

10  ratings  advanced   50 

6  ratings  advanced  100 

2  ratings  advanced 25 

2  ratings  advanced 33.3 

1  rating  advanced 85.7 


818 

REDUCTIONS. 

3  ratings  reduced   30 

3  ratings  reduced   14.3 


'»^ 


The  percentages  here  computed  were  made  upon  the  basis  of 
a  shipment  from  New  York  to  Chicago,  since  all  the  rates  between 


intermediate  points  are  figured  at  a  percentage  of  that  rate.  As 
indicative  of  the  amount  of  these  changes  the  following  rates  may 
be  cited:  New  York  to  Chicago  rates  on  starch  and  bicycles  per 
car-load  advanced  $10.  Canned  goods  increased  15  cents  a  hundred 
pounds  btween  the  same  points.  Rates  on  vehicles,  less  than  ear- 
loads,  rose  over  50  per  cent.  Coke  increased  55  cents  a  ton.  Ad- 
vances seem  to  have  been  particularly  marked  on  iron  and  steel 
products,  groceries,  agricultural  implements,  etc.  This  material 
increase  of  freight  rates  aroused  a  storm  of  protests  from  all  parts 
of  the  country,  and  in  response  the  classification  was  modified  on 
March  10  by  allowing  discounts  of  a  somewhat  complicated  charac- 
ter from  the  new  classification  rates.  Fifteen  per  cent  reduction 
was  allowed  from  second-class  rates  and  20  per  cent  from  third,  on 
less  than  carload  rates,  however,  exclusively.  It  appears  that  this 
reduced  the  average  advance  from  35.5  per  cent  to  about  21  per 
cent,  which,  in  the  opinion  of  the  Interstate  Commerce  Commission, 
represents  substantially  the  average  increase  over  the  freight  rates 
prevailing  in  trunk-line  territory  previous  to  January,  1900. 

The  action  of  the  railroads  operating  in  trunk-line  territory — 
that  is  to  say,  north  of  the  Ohio  and  east  of  the  Mississippi — was 
promptly  followed  by  carriers  in  other  parts  of  the  country.  Thus, 
on  January  25,  the  railroads  operating  west  of  a  line  from  Chicago 
to  St.  Louis,  and.  from  St.  Louis  to  the  Gulf,  promulgated  a  new 
Western  Classification,  No.  30,  to  supersede  No.  29.  By  this  action, 
according  to  the  Interstate  Commerce  Commission,  257  changes 
were  made,  240  representing  an  advance  and  17  a  reduction  of  the 
freight  rate.  On  the  basis  of  the  rate  from  Chicago  to  Missouri 
River  points,  such  as  Omaha  and  Kansas  City,  the  average  advance 
was  47.4  per  cent,  the  average  reduction  being  31.7  per  cent.  As 
indicative  of  the  degree  of  these  changes,  the  annual  reports  of  com- 
panies for  the  fiscal  year  to  July,  1901,  are  significant.  Thus  the 
Chesapeake  and  Ohio  Railway  reports  an  increase  in  revenue  per 
ton  mile  from  3.43  mills  in  1800  to  3.88  mills  in  1901;  and  upon  coal 
traffic  alone,  from  2.02  mills  to  2.72  mills  for  the  same  period. 

The  Southern  railroads  operating  south  of  the  Ohio  and  east  of 
the  Mississippi,  acting  through  the  Southern  Classification  Com- 
mittee, followed  the  action  of  the  other  roads  by  substituting  South- 
ern Classifications  Nos.  26,  27,  and  28  during  1900.  The  average 
advance  incurred,  according  to  the  Interstate  Commerce  Commis- 
sion, was  about  30  per  cent  upon  531  commodities,  with  an  average 
reduction  of  26  per  cent  upon  105.  The  changes  hereby  made  seem 
to  have  been  considerably  more  complicated  than  in  other  parts  of 
the  country,  as  will  appear  from  the  testimony  of  the  chairman  of 
the  Southern  Classification  Committee  before  the  Industrial  Com- 
mission. It  is  indubitable,  how'ever,  that  the  first  general  revision 
made  in  No.  26,  which  took  effect  on  the  1st  of  January,  1900,  did 
not  operate  to  increase  rates  extensively,  except  upon  iron  and  steel 
products.  These,  however,  were  substantially  increased.  The  rep- 
resentative of  the  Southern  Hardware  Jobbers'  Association  states 
that  over  one-half  of  their  commodities  are  affected,  in  some  cases 
by  as  much  as  50  per  cent.  The  real  advance  upon  all  other  com- 
modities was  made  by  the  succeeding  classification,  No.  27,  which 


took  effect  upon  the  1st  of  June.  No.  28,  following  six  months 
later,  made  more  reductions  than  advances,  and  seems  to  have  been 
rather  a  concession  to  public  protest,  somewhat  of  the  nature  of  the 
discounts  allowed  upon  Official  Classification  No.  20,  above  men- 
tioned. 

In  addition  to  the  general  changes  simultaneously  made  upon 
all  the  railroads  of  the  country,  as  above  described,  a  few  others 
of  a  minor  or  local  character  have  also  been  made.  As  indicative 
of  these  may  be  instanced  the  substantial  reduction  in  rates  on  steel 
products  from  Pittsburg  to  various  points,  effective  on  the  1st  of 
February,  and  the  reduction  in  Southern  territory,  upon  rates  on 
food  stuffs,  effective  on  the  1st  of  March,  1901.  On  the  other  hand, 
a  substantial  advance  has  been  made  in  Southern  territory,  effective 
on  the  1st  of  July,  1901,  in  the  rates  upon  cotton  fabrics.  This  imme 
diately  affects  one  of  the  leading  manufactures  of  the  South.  'By 
this  action  cotton  goods  are  transferred  from  fifth  to  fourth  class. 
Figuring  on  the  basis  of  New  York-Atlanta  rates,  this  means  an 
increase  per  100  pounds  from  60  to  73  cents.  The  latest  increase  is 
in  trunk-line  territory,  wherein  since  July  1,  1901,  the  minimum  car- 
load is  greatly  increased,  viz,  from  20  to  80  per  cent. 

In  this  connection  an  important  point  deserves  consideration. 
From  unpublished  data,  and  also  from  advance  sheets  of  Poor's 
Manual  of  Railroads  for  1901,  it  appears  that  the  average  ton-mile 
rates  for  the  United  States  have  not  greatly  increased  in  the  year 
1900  over  the  preceding  years.  Thus,  the  average  for  1898  was 
7.58;  for  1899,  7.26;  and  for  1900,  7.46  miles  per  ton-mile  for  the 
United  States.  The  same  relation,  namely,  a  slight  advance  for 
1900  over  1899  is  shown  by  territorial  classification  of  ton-mile  rates. 
It  is  alleged  that  on  this  showing  it  is  impossible  to  support  the 
contention  that  the  radical  advance  of  freight  rates,  as  above  men- 
tioned, has  taken  place.  As  against  this  contention  it  should  be 
noted  that  many  of  the  advances  of  rates  did  not  take  place  until 
well  along  in  the  year  1900,  and  consequently  did  not  proportionately 
increase  the  figure  for  that  year.  This  objection  is  overcome,  so 
far  as  individual  roads  are  concerned,  by  additional  data  comparing 
the  average  ton-mile  rates  for  1900  with  1901.  Of  fifteen  railroads 
operating  for  the  fiscal  year  ending  June  30,  1901,  three  show  a  de- 
crease in  the  ton-mile  revenue  amounting,  in  the  case  of  the  Chicago 
Great  Western  road,  for  instance,  to  11  per  cent.  Twelve  lines 
show  increased  average  ton-mile  rates  for  1901  over  1900,  the 
amount  of  increase  varying  from  about  1  per  cent  in  the  case  of  the 
Wabash  to  17  per  cent  on  the  Buffalo,  Rochester  and  Pittsburg. 
As  against  the  validity  of  these  data,  it  should  be  noted  that  the 
comparison  is  again  between  1901  and  the  year  1900,  which,  while 
not  reflecting  fully  the  advance  in  rates  as  above  stated,  certainly 
represents  some  portion  of  it.  A  true  comparison,  to  be  effective, 
should  be  instituted  between  the  years  1899  and  1901. 

The  interpretation  of  the  above-named  data  which  at  first  sug- 
gests itself  is  that  there  has  been  no  such  material  advance  in 
freight  rates  as  we  have  described.  Added  force  is  given  to  this 
contention  by  the  presumption  that  the  heavy  movement  of  local 
freight  and  of  higher  classes  of  merchandise  in  the  recent  prosperous 


years  would  tend  rather  to  magnify  any  increased  freight  rates  than 
to  diminish  them,  as  shown  by  ton-mile  revenue.  On  the  other 
hand,  the  movement  of  so-called  ''company  freight"  has  been  un- 
usually heavy  during  this  period  of  abnormal  expenditure  for  bet- 
terments. This  freight  moving  free  adds,  of  course,  to  the  number 
of  ton-miles  moved  without  addition  to  the  revenue,  and  propor- 
tionately reduces  the  ton-mileage  charge  reported  below  that  which 
actually  prevails  on  service  to  shippers.  More  important  than  all 
these  considerations  is  the  corollary  which  the  statistics  suggest. 
There  can  be  no  question  of  a  substantial  increase  of  puUished 
freight  rates  all  over  the  country.  Our  data  establish  this  beyond 
question.  If,  then,  the  ton-mile  revenue  reported  by  the  roads  in- 
dicates a  very  much  less  percentage  of  increase,  tJie  inevitable  con- 
clusion is  that  a  great  deal  of  freight  is  moving  at  less  than  the  puh- 
lished  rates.  This  follows  from  the  fact  that  ton-mile  revenue  is 
based  entirely  upon  the  actual  income  to  the  roads  and  has  nothing 
whatever  to  do  with  the  published  rates  as  such.  This  interpreta- 
tion, if  true,  is  of  profound  significance.  Its  bearing  upon  our  sub- 
sequent discussion  of  the  existence  of  preferential  and  secret  rates 
needs  no  further  explanation. 

DISCUSSION  AS  TO  JUSTIFICATION  OF  ADVANCES. 

Summarizing,  we  may  conclude  that  the  advance  in  published 
freight  rates  in  1900  upon  all  the  railroads  of  the  country  is  prob- 
ably not  less  than  25  per  cent.  This  action  seems  to  have  been 
taken,  as  the  railroads  assert,  in  order  to  recover  ground  lost  during 
the  period  of  depression  of  1893-1897.  It  does  not  appear,  however, 
from  consideration  of  the  movement  of  ton-mile  revenue  that  this 
period  witnessed  any  abnormal  reduction  of  freight  rates.  The  pro- 
gressive fall  seems  to  have  gone  on  continually  since  1890,  although 
at  a  very  much  less  rapid  rate,  as  we  have  said,  than  prior  to  that 
time.  Judging  by  the  movement  of  ton  mileage  rates,  it  appears 
that  the  advances  since  1899  have  been  substantial  and  general. 
Not  only  has  the  advance  in  freight  rates  since  1899  been  consider- 
able, but  it  appears  also  to  have  been  rather  unequally  distributed. 
Thus,  for  example,  a  large  majority  of  the  changes  seem  to  have 
been  incident  to  the  transfer  of  freight  from  the  fourth  to  the  third 
and  from  the  third  to  the  second  class,  thereby  widening  the  differ- 
ence between  the  rate  upon  carload  and  less  than  carload  lots. 
All  but  85  of  the  changes  in  the  Official  Classification  were  in  less  than 
carload  rates.  In  some  cases,  as  confectionery,  carload  rates  were 
reduced  while  less  than  carload  were  advanced.  This  would  seem 
to  result  in  a  disproportionate  increase  in  the  rates  upon  small 
shipments.  In  other  words,  while  most  of  the  carload  lots  remain 
unchanged,  the  increase  in  freight  rates  has  fallen  extensively  upon 
shipments  in  small  bulk.  It  also  appears  from  testimony  taken  be- 
fore the  Interstate  Commerce  Commission  in  December,  1899,  that 
the  change  in  classification  in  trunk-line  territory  was  made  with- 
out extended  investigation  by  the  committee  in  charge,  but  in  re- 
sponse to  directions  requesting  such  changes  as  tcould  produce  the 
best  possible  increase  in  revenue.     The  roads  justified  their  action, 


8 

however,  by  an  appeal  to  the  general  increase  in  the  cost  of  railroad 
operation  incident  to  the  high  prices  of  1899.  They  failed  to  reckon 
with  the  enormous  increase  in  tonnage  which  the  prosperity  of  these 
years  produced.  In  order  to  determine  the  reasonableness  of  their 
contention,  it  will  be  necessary  to  consider  the  relation  of  these 
different  factors  a  little  more  in  detail. 

THE  EFFECT  OF  INCREASED  VOLUME  OF  BUSINESS  UPON 

RAILROAD  EARNINGS. 

A  railroad  presents  one  of  the  clearest  examples  possible  of  an 
industry  subject  to  the  law  of  increasing  returns — that  is  to  say, 
an  industry  in  which  the  total  cost  of  operation  increases  less  in 
proportion  than  the  amount  of  business  transacted.  This  means, 
conversely,  that  the  net  returns  increase  more  rapidly  than  the  ex- 
pansion of  traffic.  Thus,  for  example,  a  large  part  of  the  expenses 
of  a  railroad  are  incurred  primarily  for  maintenance  of  way  and 
equipment.  These  expenses  do  not  vary  in  any  considerable  degree 
with  the  amount  of  traffic  transported;  so  that  traffic  beyond  a  cer- 
tain point  costs  but  little  more  than  the  mere  expense  of  moving 
the  trains.  In  other  words,  from  two-thirds  to  three-fourths  of.  the 
expenses  of  a  railroad  go  on  independently  of  the  amount  of  freight 
or  passengers  moved.  We  may  illustrate  this  by  a  computation 
made  by  Acworth,  an  English  expert: 

"In  a  hundred  units  the  traffic  costs  the  company  100  shillings 
for  interest  and  expenses.  It  is  probably  a  fair  estimate  to  say 
that  1,000  units  will  cost,  not  1,000,  but  325  shillings.  The  figures 
are  arrived  at  as  follows:  Interest  on  capital  remains  invariable; 
this,  as  we  have  seen,  represents  one-half  the  total  cost.  Of  the 
working  expenses  fully  one-half,  according  to  estimates  made  by 
experts  in  different  countries,  w^hich  largely  agree,  remain  constant. 
The  remaining  half  is  taken  to  increase  proportionately  to  the  in- 
crease of  traffic.  The  old  expenditure  for  the  100  units  was,  then. 
50  plus  25  plus  25;  the  new  expenditure  is  50  plus  25  plus  250, 
equals  325  shillings.'' 

The  same  authority  illustrates  this  by  comparison  of  the  Mid- 
land and  Great  Western  Railway  of  Ireland  and  the  Lancaster- 
shire  and  Yorkshire  Railroad.  These  two  are  of  about  equal  length, 
approximately  530  miles.  The  latter  carries  40  times  the  traffic  of 
the  former  road,  and  yet  its  expenses  for  maintenance  of  way  are 
only  8  times  as  much. 

This  law  that  an  increase  in  the  volume  of  business  upon  a 
railroad  does  not  involve  a  corresponding  expense  in  cost,  may  be 
illustrated  in  another  way.  Comparing  the  years  1809  with  189-1 
we  find  that  the  gross  earnings  of  the  railroads  of  the  United  States 
increased  by  22  per  cent.  This  involved  an  increased  expense  of 
operation,  however,  of  only  17  per  cent.  A  similar  comparison  of 
1900  with  1894,  there  having  been  an  enormous  expansion  of  busi- 
ness, shows  an  increase  in  gross  earnings  of  38  per  cent,  involving 
increased  expenditure  of  only  31  per  cent.  This  fact  would  be  all 
the  more  striking  could  we  exclude  the  enormous  expenditures  for 


betterments  which  have  beeu  charged  to  operating  expenses  during 
the  last  year.  Workings  over  these  results  by  comparison  per  mile  of 
line,  it  appears  that  the  rate  of  increase  in  earnings  per  mile  of  line 
for  five  years  is  approximately  double  the  rate  of  increase  of  operat- 
ing expenses  per  mile  of  line.  Applying  this  law,  for  instance,  to  a 
particular  road, the  Missouri  Pacific, by  comparing  the  lean  year  1894 
with  the  prosperous  year  1899,  we  have  an  increase  of  gross  earn- 
ings for  this  road  of  |6,250,000;  this  expansion  of  business,  how- 
ever, cost  only  a  trifle  over  |3,000,000  more  for  expenses  of  opera- 
tion. Bearing  in  mind  that  on  the  entire  traffic  of  this  road  the  pro- 
portion of  operating  expenses  to  operating  income  was  75.9  per 
cent,  the  greatly  lessened  cost  of  performing  additional  business 
becomes  at  once  apparent.  This  explains  why  upon  many  of  the 
railroads  the  increase  in  net  earnings  has  been  more  than  in  pro- 
portion to  gross  earnings,  although,  as  has  already  been  shown,  the 
average  revenue  per  ton-mile  has  steadily  decreased.  Making  still 
another  comparison  for  the  Chicago,  Rock  Island  and  Pacific  Rail- 
way, as  between  1895  and  1900,  we  find  that  gross  earnings  have 
increased  45  per  cent,  while  the  increase  in  net  earnings  has  been 
73  per  cent.  The  Chesapeake  and  Ohio  Railway,  able  to  earn  net 
only  12,200,000  in  1891,  with  a  ton-mile  revenue  of  5.25  mills,  now, 
in  the  fiscal  year  to  July,  1901,  earned  more  than  twice  as  much,  at 
a  revenue  per  ton-mile  of  only  3.43  mills. 

An  interesting  comparison  with  the  previous  decade,  1870  to 
1880,  exemplifies  this  relation  still  further.  The  gross  earnings  of 
the  trunk  lines  of  the  United  States  decreased  very  greatly  per 
mile  of  line,  but  at  the  same  time  the  net  earnings  steadily  in- 
creased. This  was  due  primarily  to  the  great  volume  of  business 
developed,  the  ton-mileage  increasing  more  than  threefold  during 
these  ten  years.  It  happened  despite  the  fact  that  the  mileage  of 
line  during  the  same  time  had  more  than  doubled.  The  following 
decade,  1880  to  1890,  was  represented  by  an  increase  of  only  82.7  per 
cent  in  mileage,  while  the  number  of  tons  of  freight  hauled  one 
mile  increased  by  132  per  cent.  Density  increasing  in  this  way,  a 
corresponding  ability  to  carry  at  a  lower  rate  per  ton  was  a  neces- 
sary result.  So  indisputably  has  this  law — that  an  expanding  vol- 
ume of  business  may  profitably  be  carried  at  a  continually  lowered 
cost — been  provided,  that  it  is  estimated  by  so  competent  authority 
as  the  Engineering  Review  that,  provided  sufficient  tonnage  be 
available  for  2,000-ton  freight-train  loads,  a  cost  of  one  mill  per  ton- 
mile  can  be  attained.  Its  significance  may  be  realized  from  the  fact 
that  the  lowest  revenue  per  ton-mile  reported  for  the  United  States 
is  2.21  mills  per  ton-mile  for  the  long-haul  soft-coal  business  of  the 
Chesapeake  and  Ohio  Railway.  This  does  not,  of  course,  imply  that 
any  railroad  in  actual  operation  carrying  all  kinds  of  freight,  in- 
cluding a  large  proportion  of  local  traffic,  can  in  the  immediate  fu- 
ture approach  this  result.  It  is  intended  only  to  show  that,  provided 
the  volume  of  traffic  be  large  enough,  the  cost  per  ton-mile  may  be 
reduced  even  lower  than  it  is  at  present  without  injustice  or  loss  to 
the  owners  of  the  roads  themselves. 


10 


HOW   FAR  ARE   THE   CAUSES    OF  PRESENT    RAILROAD    PROS- 
PERITY PERMANENT? 

Summarizing  the  present  causes  of  railroad  porsperity,  they 
seem  to  be  sixfold.  In  the  first  place,  they  are  due  to  the  revival  of 
general  business  rather  than  to  any  particular  abundance  of  crops. 
Secondly,  they  are  due  to  actually  higher  freight  rates  than  have  pre- 
vailed for  many  years.  In  the  third  place,  these  are  not  only 
higher,  but  by  reason  of  harmonious  action  of  the  various  roads  they 
are  being  actually  maintained.  In  other  words,  rate-cutting  is  less 
prevalent  than  for  many  years.  Fourthly,  the  railroads  are  being 
more  economically  administered  than  at  any  time  in  their  history, 
such  economies  having  been  in  large  measure  induced  as  a  neces- 
sity during  the  lean  years  of  1893  to  181)7.  Fifthly,  extraordinary 
expenditures  for  railroad  improvement,  and  particularly  for  reno- 
vation of  the  right  of  way,  are  the  rule.  In  other  words,  a  vast 
amount  of  money  is  being  expended  for  supplies  which  are  properly 
postponed  operating  expenses  from  previous  years.  Lastly,  despite 
the  increased  volume  of  business  and  the  growth  of  population,  no 
proportionate  amount  of  new  construction  has  taken  place.  In 
other  words,  as  above  mentioned,  the  last  decade  has  witnessed  a 
notable  decline  in  activity  of  such  new  construction.  The  result  of 
this  is  that  at  the  present  time,  more  than  at  any  previous  period  in 
our  history,  the  country  has  grown  to  the  measure  of  its  transpor- 
tation facilities. 

PERMANENCE  OF  THESE  FACTORS. 

In  order  to  determine  how  far  the  present  prosperity  of  rail- 
roads is  permanent,  we  may  properly  apply  this  question  to  each  of 
the  several  causes  above  cited.  As  to  the  volume  of  business,  while 
the  country  has  grown  in  general  it  can  scarcely  be  expected  that 
continued  activity  in  general  trade  on  the  present  scale  can  be  main- 
tained. It  does  appear,  however,  that  the  change  in  the  character 
of  the  tonnage — that  is  to  say,  a  lessening  reliance  of  the  railroads 
upon  mere  crop  transportation — is  a  condition  which  has  come  to 
stay.  It  is  a  natural  result  of  the  growth  of  towns  and  cities  along 
the  lines  of  railroad.  As  for  the  second  factor,  the  peculiarly  high 
rates  put  in  force  in  1900,  more  doubt  may  be  expressed  as  to  their 
permanency.  Railroad  returns,  such  as  are  current  at  the  present 
time,  are  likely  to  invite  increased  supervision  and  regulation  of 
rates  both  by  courts  and  State  or  Federal  commissions.  More 
effective  than  these,  however,  in  reduicng  rates  must  inevitably  be 
the  increasing  competition  of  railroad  systems,  and  of  rival  markets 
one  with  another.  Every  improvement  in  tranoceanic  transportation 
must  sharpen  competition  of  remote  producers  for  the  world's 
market.  The  railroads  of  the  country  must  perform  their  part  and 
in  their  own  interest  in  order  to  enable  the  American  producer  to 
secure  his  share.  The  necessary  result  of  this  will  be  declining 
rates,  such  as  have  been  observed  progressively  in  the  last  thirty 
years.    The  only  other  alternative  is  that  the  railroads  should  unite 


11 

by  harmonious  action  to  prevent  this  result,  but  the  danger  to  their 
constituents  and  also  to  themselves  through  hostile  legislative 
sentiment  may  be  relied  upon  to  postpone  such  union.  It  is  to  be 
hoped  that  the  maintenance  of  rates  at  published  tariffs — that  is  to 
say,  the  abolition  of  personal  discrimination  as  between  various 
shippers — is  an  improvement  in  the  railroad  situation  which  has 
come  to  stay.  The  advantage  'of  a  phenomenal  volume  of  business 
has  temporarily  aided  in  this  respect.  The  true  status  of  affairs  is 
well  stated  by  President  Ingalls,  of  the  Big  Four  road,  before  the 
Industrial  Commission,  as  follows:  ''My  judgment  is  when  this  rush 
of  business  is  over  the  railroads  will  gradually  drift  back  to  their 
old  ways,  and  we  must  have  some  legislation  to  help  us."  It  is  too 
early,  as  will  appear  from  subsequent  discussion  of  the  community- 
of-interest  principle,  to  form  a  judgment  respecting  its  peculiar 
efficacy  as  a  safeguard  against  rate  cutting;  but  it  is  to  be  hoped 
that  increased  publicity  and  wise  legislation,  combined  with  a  far- 
sighted  policy  on  the  part  of  the  railroads  themselves,  will  never 
permit  a  return  to  the  wholesale  abuses  of  previous  years  in  this 
respect.  Of  the  bright  future  for  American  railroads  as  a  result  of 
their  remarkable  economies  in  operation  it  is  unnecessary  to  speak 
further.  That  they  are  better  and  more  economically  administered 
than  ever  before  has  been  amply  demonstrated.  That  prosperity 
will  engender  once  more  a  wastefulness  and  extravagance  of  unsci- 
entific railway  operation  is  hardly  to  be  feared.  This  is  an  improve- 
ment which  is  apparently  permanent.  Respecting  the  stimulus  to 
present  prosperity  due  to  vast  improvements,  and  especially  to  ex- 
penditure on  account  of  past  retrenchment  in  lean  years,  it  may  be 
said  that  this  is  an  element  which  must  always  peculiarly  exagger- 
ate the  depression  of  lean  years  and  enhance  the  beneficence  of 
periods  of  prosperity.  The  advantage,  however,  where  possible, 
of  maintaining  railroads  by  normal  expenditures  in  years  when 
prices  are  normal,  rather  than  of  postponing  them  by  shortsighted 
or  enforced  financing  to  years  when  prices  are  inflated,  is  too  patent 
to  merit  discussion.  If  the  experience  of  the  past  has  been  wisely 
interpreted,  railroad  operation  in  the  future  should  more  and  more 
evenly  distribute  expenditure  year  by  year,  rather  than  concentrate 
it,  as  has  too  often  been  the  case  in  the  past.  Such  action  on  the 
part  of  the  roads  should  prove  a  helpful  factor  in  the  future. 

EFFECT  OF  FUTURE  RAILROAD  CONSTRUCTION. 

The  final  reason  above  mentioned  for  the  present  prosperity  of 
American  railroads,  and  the  one  which  perhaps  more  than  any  other 
makes  the  future  bright,  is  the  limitation  of  new  construction.  The 
evils  of  the  past  when  no  price  was  too  great  to  pay  for  a  new  rail- 
road, however  unnecessary  from  the  point  of  view  of  actual  service, 
are  becoming  more  and  more  appreciated.  Since,  however,  pros- 
perity always  invites  speculation  and  promotion  of  new  corpora- 
tions, it  may  not  be  out  of  place  to  dwell  a  little  more  in  detail  upon 
this  point.  The  causes  which  at  the  present  time  tend  to  restrict  the 
construction  of  new  competing  roads  are  several.    In  the  first  place, 


12 

the  experience  of  the  past  makes  financiers  more  cautious.  Bankers 
and  underwriting  syndicates  may  be  expected  to  exercise  greater 
caution  in  the  promotion  of  new  roads.  Another  consideration  oper- 
ating in  tlie  same  way  is  the  increasing  cost  and  difficulty  of  secur- 
ing terminal  facilities  in  any  of  the  more  densely  populated  parts 
of  the  country.  This  enormous  cost  of  the  right  of  way,  and  par- 
ticularly of  securing  entrance  into  Hie  heart  of  larger  cities,  oper- 
ates effectively  to  discourage  enterprises  of  this  sort.  The  commu- 
nity of  interest  principle  must  also  be  reckoned  with  to  prevent 
adjacent  and  formerlj-  rival  systems  from  extending  feeders  or 
branch  lines  into  each  other's  teritory  in  order  to  secure  business. 
Another  cause  peculiar  to  the  nature  of  railroad  operation  itself 
should  be  mentioned.  Kailroad  rates  have  at  the  present  time  de- 
clined by  reason  of  railroad  competition  to  a  figure  where  an  enor- 
mous volume  of  traffic  is  necessary  in  order  to  secure  adequate 
return  upon  the  capital  invested.  In  no  other  way  than  by  trans- 
porting a  huge  volume  of  traffic  with  its  incident  economies  can 
railways  live  under  present  conditions.  Such  a  volume  of  traffic  is 
not  in  existence  at  the  present  time  in  excess  of  existing  facilities, 
and  consequently  the  incentive  to  the  construction  of  new  lines  is  in 
large  measure  absent. 

The  causes  limiting  new^  railroad  construction  above  mentioned 
are  mainlj-  private  in  their  character.  The  cooperation  of  the  pub- 
lic to  the  same  end  may,  however,  be  secured  by  enactment  of  wise 
legislation.  Such  is  coming  to  be  the  case  in  many  of  the  most  pro- 
gressive commonwealths.  The  policy  of  requiring  certification  of  a 
railroad  commission  that  public  convenience  and  necessity  warrant 
the  construction  of  a  new  road  has  long  been  exemplified  in  Mas- 
sachusetts. New  York,  since  1892,  has  followed  in  the  same  path,  as 
have  several  of  the  other  eastern  States.  Illinois,  a  typical  middle 
State,  has  adopted  the  same  policy.  Thus,  in  the  recommenda- 
tions of  the  Illinois  railroad  commissioners  in  1895,  special  stress  is 
laid  upon  the  desirability  of  restraining  promotion  by  irresponsible 
persons.  It  is  accepted  by  that  commission  as  a  leading  principle 
as  laid  down  in  a  recent  case  under  the  New  York  law,  that  the 
privilege  of  constructing  a  railroad  is  but  a  franchise  granted  by 
the  State.  Under  such  circumstances  it  is  a  privilege  to  be  exer- 
cised only  when  its  exigency  and  desirability  has  been  established 
beyond  all  measure  of  doubt. 

The  proposition  has  been  been  advanced  frequently  before  the 
Industrial  Commission  that  supervision  in  the  construction  of  in- 
terstate lines  should  be  exercised  not  only  by  the  States  but  by 
Federal  authority.  The  difficulties  incident  to  such  policy  are, 
however,  apparent — this  was  clearly  evidenced  before  the  Cullora 
Committee  in  1886 — inasmuch  as  it  would  always  be  possible  to 
construct  a  line  in  sections,  each  section  being  in  first  instance 
wholly  within  the  jurisdiction  of  a  single  State.  By  this  means  the 
control  exericsed  by  a  Federal  Commission  would  be  rendered  ex- 
ceedingly difficult.  The  conditions  are  markedly  different  from 
those  which  prevail  in  England,  where,  for  instance,  an  act  of  Par- 
liament is  necessary  for  incorporation,  and  where  the  expense  is 


13 

so  considerable  as  to  preclude  irresponsible  promotion.  It  should 
be  stated  that  whatever  the  action  taken,  it  should  not  only  be  in 
the  public  interest,  but  also  as  a  matter  of  justice  to  the  railroads 
already  constructed.  Railroad  regulation  and  supervision  have 
come  to  stay;  there  can  be  no  question  about  that  fact.  A  corol- 
lary, however,  of  control  and  supervision  should  be  protection,  and 
the  only  adequate  protection  offered  to  existing  railroads  will  be 
restraint  upon  the  construction  of  rival  lines  intended  to  serve  not 
the  jiublic  but  solely  the  ends  of  those  who  promote  and  finance 
them. 

THE  CONSOLIDATIONS  OF  1898  TO  1900. 

Since  the  return  of  prosperity  in  1898,  railroad  consolidation 
upon  a  scale  hitherto  unequalled  has  been  under  way.  The  earlier 
systems,  which  during  the  nineties  rose  to  a  maximum  of  10,000 
miles  of  line,  have  now  been  superseded  by  the  organization  of  sys- 
tems under  common  control  which  include  from  15,000  to  20,000 
miles  apiece.  The  extent  of  this  movement  may  be  Judged  from  the 
statement  of  the  Interstate  Commerce  Commission  that  "disregard- 
ing mere  rumors  and  taking  account  of  well  authenticated  state- 
ments, there  were  absorbed  in  various  ways  between  July  1,  1899. 
and  November  1,  1900,  25,311  miles  of  railroad.  There  are  in  the 
whole  United  States  something  less  than  200,000  miles  of  road; 
more  than  one-eighth  of  this  entire  mileage  was,  within  the  above 
period,  brought  in  one  way  and  another  under  the  control  of  other 
lines."  Since  the  1st  of  November,  1900,  this  rate  of  consolidation 
has  been  still  further  exceeded,  while  at  the  same  time  the  charac 
ter  of  the  changes  has  become  noticeably  different.  Forces  are  ap- 
parently at  work  which  may  within  the  immediate  future  bring  the 
railroad  system  of  the  United  States  under  the  control  of  com- 
paratively few  dominating  financial  interests.  It  is  highly  important 
that  the  character  of  this  change  should  be  thoroughly  understood, 
inasmuch  as  it  involves  not  alone  the  consolidation  of  hitherto  in- 
dependent railroads,  but  the  amalgamation  of  entire  systems. 

The  recent  period  of  consolidation  was  inaugurated  early  in 
1898  and  1899,  notably  by  changes  upon  the  Eastern  trunk  lines. 
The  New  York  Central  not  only  took  formal  possession  of  the  Mich 
igan  Central  road,  but  also  absorbed  bodily  the  Lake  Shore  and 
Michigan  Southern,  which  in  turn  controlled  the  New  York,  Chicago 
and  St.  Louis,  and  other  subsidiary  properties.  These  accessions 
have  been  since  followed  by  the  acquisition  of  the  New  York,  Lake 
Erie  and  Western,  and  by  further  increase  in  investment  holdings 
in  the  Big  Four  road.  The  tendency  toward  expansion  has  iDeen 
even  more  marked  in  the  case  of  the  Pennsylvania  Railroad,  which, 
owning  in  fee  but  a  little  over  500  miles  of  line,  now  leases  and 
operates  four  or  five  times  as  much  directly;  while  at  the  same 
time,  through  the  Pennsylvania  Company  operating  west  of  Pitts- 
burg and  Erie,  it  adds  about  4,300  more  miles  of  line.  The  follow- 
ing changes  effected  in  1900  illustrate  the  scope  of  its  recent  en- 
largement. Substantial  investments  having  been  made  in  the 
rival  soft-coal  roads,  such  as  the  Baltimore  and  Ohio,  the  Chesa- 


14 

peake  and  Ohio,  and  the  Norfolk  and  Western,  these  holdings  have 
since  January,  1900,  been  extended  until  at  the  present  time  they 
amount  to  virtual  control.  In  March  of  the  same  year  the  Erie 
and  Western  Transportation  Company  was  acquired,  giving  greatly 
enlarged  facilities  upon  the  Great  Lakes.  This  was  followed  in 
June  by  the  acquisition  of  the  Western  New  York  and  Pennsyl- 
vania, which,  by  the  control  of  a  majority  of  the  stock,  gave  an  in- 
dependent outlet  to  the  Pennsylvania  system  at  Buffalo.  Two 
months  later  came  the  announcement  of  the  control  of  the  Alle- 
gheny Valley  Railway,  adding  S20  miles  of  line  to  its  holdings.  In 
the  spring  of  the  same  year  a  majority  of  stock  of  the  Long  Island 
Railroad  was  purchased,  and  far-reaching  plans  are  under  way  for 
improvement  of  terminal  facilities  at  New  York. 

The  purchase  of  the  Central  Railroad  of  New  Jersey  by  the 
Reading  Railway,  and  of  the  Pennsylvania  Coal  Company  by  the 
Erie  system,  have  profoundly  affected  the  status  of  the  anthracite 
coal  roads.  Changes  even  more  stupendous  have  been  effected  in 
1901  in  the  territory  west  of  the  Mississippi.  Prominent  among 
these  may  be  mentioned  the  acquisition  of  the  Southern  Pacific 
system  by  the  Union  Pacific;  and  the  joint  purchase  of  the  Chicago, 
Burlington  and  Quincy  by  the  Great  Northern  and  Northern  Pa- 
cific railroads.  The  Southern  Railway  has  increased  its  line  by 
nearly  1,000  miles  through  the  purchase  of  the  Mobile  and  Ohio 
in  the  Southern  States.  In  the  Southwest  there  are  indications  of 
the  formation  of  a  great  system  under  the  domination  of  the  Mis- 
souri Pacific  Railway,  which,  through  the  consolidation  of  various 
roads  in  Colorado,  seem  to  be  reaching  out  toward  an  outlet  on  the 
Pacific  coast. 

STATISTICAL  RESULTS. 

The  magnitude  of  the  amalgamations  hereby  indicated  may  be 
appreciated  by  a  tabulated  statement  of  the  various  groups  under 
financial  control,  as  indicated  by  the  Common  Carrier,  a  technical 
railroad  journal.  A  similar  table  by  the  editor  of  the  Railway 
World  wOl  be  found  in  the  Review  of  Reviews  for  August,  1901. 
This  statement  is,  of  course,  approximate,  but  it  indicates  the  de- 
gree to  which  unification  has  already  proceeded.  According  to  this 
statement  more  than  half  of  the  mileage  of  the  United  States  is 
now  under  the  control  of  six  financial  interests,  four  of  which  at 
least  each  approach  a  limit  of  mileage  of  20,000  miles.  It  should 
be  carefully  noted  that  this  table  indicates  ownership  and  not  opera- 
tion. Many  of  the  separate  railroads  indicated  are  operated  in  a 
number  of  groups. 


15 


Community  of  Interest  among  Railroads  in  the  United  Stales. 


Lines. 


I. — Vanderbilt  Geoup. 


New  York  Central  lines 

Delaware,  Lackawanna  and  Western. 
Chicago  and  Northwestern 


II. — Morgan  Group. 


Southern  Railway 

Moiiile  and  Ohii) 

Queen  and  (rescenl 

Central  ol  (ieorjiia 

Georgia  Southern  and  Florida. 

Mamm  and  Birtninsham  

Philaileipliia  and  Beading 

Lehigh  Valley 

Krie 

Central  of  New  Jer.sey 

Atlantic  Coast  Line 


III. — Harriman  Group. 


Illinois  Central 

Union  Pacific 

Oresion  Rai'road  and  Navigation  Co. 

Oregcm  Short  Line 

Chii-agii  an  i  Alton 

Southern  Pacific 

Kansas  City  southern 

Chicago  Terminal  Transfer 


Miles. 


10,010 
951 


1S),.t17 


6,8"7 

879 

1,115 

l,f<35 

285 

97 

1.891 

1,404 

2,271 

677 

1,812 

19,073 


IV. — Pennsylvania  Group. 

Pennsylvania  system 

Biitfalo,  Roehe-'ter  and  Pittsburg 

Western  New  York  and  Pennsylvania 

Chesapeake  and  Ohio 

NorfolK  ani(  Western 

Haltiniore  and  Ohio  system 

Long  island 


5,000 
3,0-9 
1,137 
1,498 

918 
7,723 
■    83! 

1"7 


20,24. 


10,031 

650 

633 

1  47  ti 

l,r.71 

3,1.5(i 

603 


18,220 


Lines. 


V. — GooLD  Group. 


Missouri  Pacific 

Texas  and  Pacific 

St.  Liiiii<  and  Southwestern 

International  and  lireat  Northern. 

lienvf-r  and  Rio  Grande 

Missouri,  Kansas  and  Texas 

Rio  Grande  Western 

Wabash 


VI. — Hill  Group. 


Great  Northern... 
Northern  Pacific. 


VII. — Belmont  Group. 


Louisville  and  Nashville 

Nashville,  Chattanooga  and  St.  Louis. 


VIII.— Belmokt-Mobgan. 


Georgia  Railroad 

.\tlariiaand  We^t  Point. 
v\  estern  of  Alabama 


IX.— Independent  Systems. 


Seaboard  Air  Line 

Plant  syst'^m 

<hiias;o,  Milwaukee  and  St.  Paul 

Rock  Island 

(1iicas:<>,  Burlington  and  Qiiincy.....'. 

Atidiison,  Topeka  and  Satita  Fe 

.St.   Louis  and  San  Franci.sco  (K.  C, 

M.  &  B) : 

Chicago  and  (ireat  Western 

(Colorado  Southern 

Pere  Marquette 


Miles. 


5,326 
1,599 
1,^65 

825 
1,675 
2,423 

6U3 
2,358 


16,1174 


5,185 
5,188 


10,373 


3,235 
1,195 


4,430 


307 

87 

128 


532 


2.591 
2,170 
6,. 592 
3,819 
.-  ,070 
7,808 

3,000 
1,023 
1,142 
1,762 


37,977 


SUMMARY. 


Groups. 

.Mileage. 

Groups. 

Mileage. 

Vanderbilt 

19,517 
19,o73 
211,245 
18,2 JO 
16,"74 
10,373 

4,430 

532 

Harriman 

Independent 

Pennsylvania 

108,464 

Gould 

37,977 

Hill 

CHARACTERISTICS    AND    OBJECTS    OF    RECENT    CONSOLIDA- 
TIONS. 


The  consolidations  of  the  last  two  years  not  only  contrast 
stroDfjlv  in  magnitude  with  those  of  earlier  years;  they  are  at  the 
same  time  essentially  different  in  character.  The  purpose  of  the 
earlier  combinations  was  in  the  main  to  secure  business  by  exten- 


16 

sion  of  lines  and  feeders  to  strategic  points.  As  has  been  properly 
said  by  Professor  Hull:  ''They  were  primarily  administered  not 
geographically;  each  aimed  to  handle  its  own  traffic  and  to  secure 
a  strong  position.  A  strong  position  was  useful  in  adjusting  a  pool 
with  rivals  whose  geographical  location  was  like  their  own,  and  if 
pooling  were  improper  or  illegal,  a  strong  position  might  prove 
not  less  useful  in  fighting."  These  earlier  extensions  also  conduced 
markedly  to  economy  of  operation.  Thus  in  place  of  the  old  fast 
freight  lines  which  operated  over  a  number  of  independent  roads, 
a  single  railroad  company  could  run  its  OAvn  cars  without  break  di- 
rectly from  Chicago  to  the  seaboard  on  its  own  rails.  The  object 
of  these  later  consolidations  is  essentially  different.  The  country 
has  been  well  equipped  with  a  network  of  branch  lines  and  feeders. 
Most  of  the  strategic  points  have  been  reached  by  a  number  of 
roads  in  common.  There  is  no  longer  any  object  in  economy  of 
operation  to  be  sought;  in  fact,  the  railroads  since  1890  have  been 
obliged  to  divide  their  lines  into  independent  groups  for  operation 
separately,  in  order  to  obtain  a  maximum  of  economy.  The  new 
consolidations  are  intended  expressly  to  obviate  competition;  once 
rival  systems  are  brought  under  control  in  order  to  insure  har- 
monious action.  The  railroads  of  the  country  are  no  longer  divided 
into  trunk  lines  and  western  systems,  but  the  railroads  east  and 
west  of  Chicago  and  even  west  of  the  Missouri  River  are  tending 
to  become  firmly  knitted  together. 

A  peculiarity  of  these  recent  changes  deserves  special  mention. 
In  order  to  attain,  a  single  important  end  it  often  becomes  neces- 
sary to  acquire  an  entire  system  of  railroads,  although  only  a  small 
portion  of  that  system  can  add  directly  to  the  efficiency  of  the  con- 
trolling road.  Thus,  the  entire  Burlington  system  is  absorbed  by 
the  northern  trans-continental  lines  for  no  other  reason  than  that 
they  may  obtain  a  direct  entrance  into  Chicago.  The  Union  Pacific 
Railroad  purchased  control  of  the  Southern  Pacific  system,  not  be- 
cause it  needed  that  added  mileage,  but  rather  that  it  might  in- 
directly acquire  the  Central  Pacific  and  a  direct  outlet  to  the  Pacific 
coast.  The  Long  Island  Railroad  is  purchased  by  the  Pennsylvania 
Company,  not  for  its  local  business  along  the  main  line,  but  simply 
in  order  that  valuable  terminals  in  Brooklyn  may  be  developed. 
Even  the  profitable  local  business  of  the  Central  Railroad  of  New 
Jersey  sinks  into  insignificance  as  a  valuable  possession  of  the 
Reading  Railway  when  compared  with  its  subsidiary  coal  business 
and  the  value  of  its  terminals  in  Jersey  City.  This  peculiarity  of 
recent  consolidations  is  undoubtedly  due  to  the  fact  that  the  coun- 
try is  already  sufficiently  equipped  with  railroad  lines  for  the  trans- 
action of  ordinary  business.  New  and  independent  inlets  to 
strategic  points  would  be  therefore  of  doubtful  value  as  self-sup- 
porting feeders.  And  more  important  still,  terminal  facilities  have 
now  become  so  valuable  that  no  newly  organized  road  or  branch 
line  can  hope  to  secure  an  entrance  without  enormous  cost.  It  may 
be  cheaper,  in  other  words,  to  buy  a  whole  system  for  the  sake  of 
its  terminals  or  for  the  sake  of  a  part  of  its  main  line,  than  to  de- 
velop new  terminals  or  to  parallel  already  existing  railroads. 

Undoubtedly  the  most  important  of  the  objects  sought  in  these 


17 

receut  wholesale  consolidations  lias  been  the  elimination  of  com- 
petition; that  is  to  say,  to  secnio  t1ip  mnintpnauce  of  established 
rates  by  removal  of  the  incentive  to  rate  cntting  which  competition 
in  the  past  has  induced.  In  order  to  secure  this  end  it  has  become 
practically  necessary  to  dominate  by  one  financial  interest  an  en- 
tire geographical  section  of  the  country.  This  new  policy  of  divi- 
sion of  the  field  by  means  of  community  of  interest  deserves  careful 
consideration  by  itself. 

RESULT  OF  RECENT  CONSOLIDATIONS. 

An  obvious  and  logical  result  of  the  wholesale  consolidations 
of  the  last  two  years  may  be  to  apportion  the  entire  country  be- 
tween great  groups  of  railroad  interest,  each  of  which  shall  entirely 
dominate  the  situation  within  its  own  area.  This  policy  of  terri- 
torial grouping  or  division  of  the  field  is  not  new  in  Europe.  It 
was  the  expedient  finally  adopted  after  years  of  disturbance  in 
France,  and  its  results  have  been  in  the  main  salutary.  It  is  like- 
wise the  policy  which  has  been  pursued  as  between  the  various  ex- 
press companies  operating  in  the  United  States  for  a  number  of 
years.  On  American  railroads  it  was  first  exemplified  in  the  case 
of  the  Xew  England  territory,  where  conditions  most  nearly  ap- 
proached those  which  prevailed  in  western  Europe.  This  cul- 
minated in  the  agreement  of  1893  by  which  the  Boston  and  Maine 
Kailroad  and  the  New  York,  New  Haven,  and  Hartford  road  agreed 
to  keep  out  of  each  other's  territory,  each  developing  its  own  re- 
sources to  the  best  of  its  ability.  The  recent  lease  of  the  Fitchburg 
Kailroad  and  the  purchase  of  the  Central  Massachusetts  by  the  Bos- 
ton and  Maine  completed  this  plan  of  division.  All  the  railroads  in 
New  England  at  the  present  time,  except  two  in  Vermont,  are 
segregated  in  two  groups,  lying  respectively  north  and  south  of  the 
Boston  and  Albany  Railroad,  which  affords  a  mere  outlet  to  the 
coast  for  the  New  York  Central. 

Such  a  policy  of  division  of  the  field  or  territorial  apportion- 
ment would  seem  to  be  a  logical  result  of  the  community  of  inter- 
est plan.  Both  alike  seem  to  be  in  some  degree  also  the  product 
of  the  prohibition  of  pooling  by  the  Act  to  Regulate  Commerce  in 
1887.  Territorial  division  of  the  field  is,  however,  essentially  dif- 
ferent from  community  of  interest.  The  latter  implies  that  each 
road"  throughout  a  section  of  the  country  shall  be  represented  ade- 
quately upon  the  directorate  of  every  other  road.  Such  a  situation, 
which  might  make  for  harmony,  will,  however,  as  it  appears, 
speedily  become  complex.  The  distinction  between  the  two  may 
be  shown  by  developments  in  the  case  of  the  Chesapeake  and  Ohio. 
The  control  of  that  road  was  originally  secured  by  the  New  York 
Central  and  Pennsylvania;  that  is  to  say,  the  standard  trunk  line 
interests  jointly.  It  soon  became  apparent,  however,  that  the  in- 
terests of  the  Pennsylvania  road  in  the  Chesapeake  and  Ohio  were 
far  more  intimate  than  those  of  the  New  York  Central,  the  latter 
road  merely  being  concerned  in  the  prevention  of  rate  cutting.  As_^ 
a  result,  an  exchange  of  holdings  seems  to  have  taken  place  to,  the 
end  that  the  Pennsylvania  is  allowed  to  dominate  the  Chesapeake 

2a  . 


18 

and  Ohio  which  operates  alongside  of  it,  and  which  is  likewise  en- 
gaged as  a  rival  in  the  bituminous  coal  traflfic;  while  on  the  other 
hand  investments  of  the  Pennsylvania  road  in  properties  contiguous 
to  the  New  York  Central  are  released  in  favor  of  the  Vanderbilt 
interest.  In  other  words,  an  exchange  of  investments  takes  place 
on  the  basis  of  territorial  apportionment.  Community  of  interest 
control  is  superseded  by  division  of  the  field.  If  such  influences 
shall  subsequently  come  into  play  throughout  the  remainder  of  the 
country,  the  division  of  the  field  policy  so  long  peculiar  to  France 
may  become  an  established  fact  in  the  United  States. 

Considering  the  United  States  as  a  whole,  it  appears  that  the 
character  and  scope  of  such  territorial  grouping  as  a  possible  de- 
velopment of  the  future  may  be  determined  with  some  definiteuess. 
In  the  first  place,  the  New  England  roads  are  already  consolidated 
on  such  a  basis.  Secondly,  in  trunk-line  territory  the  division  of 
the  field  seems  to  have  been  recently  progressing  as  described: 
that  is  to  say,  the  Southern  trunk  lines  are  under  the  control  of 
the  Pennsylvania  road,  leaving  alone  the  Erie  and  other  minor  prop- 
erties as  independent.  Rumors  that  the  Erie,  the  Lehigh  Valley 
and  others  are  to  be  dealt  with  under  the  community  of  interest 
plan  are  rife,  as  also  that  the  coal  interests  of  some  of  these  roads 
are  to  be  brought  under  common  control  wtih  the  other  anthracite 
carriers,  whereas  their  general  transportation  interests  will  be  affi- 
liated with  the  standard  trunk  lines.  This  latter  policy  in  the  case 
of  the  Delaware  and  Hudson  has  been  repeatedly  predicted.  The 
third  territorial  group  centers  in  the  Southern  States.  In  this  sec- 
tion of  the  country  the  Southern  Railway  is  reaching  out  and  ab- 
sorbing branches  as  well  as  competitors  in  all  directions.  Its  rela- 
tions with  the  Louisville  and  Nashville  have  not  always  been  dis- 
tinctly competitive.  Practical  pooling  at  important  points  has  long 
existed.  If,  however,  as  seems  probable,  the  Southern  road  should 
secure  an  inlet  to  Chicago  as  it  has  already  secured  an  entrance  into 
St.  Louis,  it  will  come  into  distinctly  competitive  rivalry  with  the 
Illinois  Central,  and  then  to  a  larger  degree  with  the  Louisville  and 
Nashville.  Until  this  time  the  prospects  of  wholesale  combination 
on  the  basis  of  community  of  interest  or  otherwise  appear  to  be 
rather  unlikely.  A  fourth  group  is  composed  of  the  "granger  roads" 
operating  in  the  territory  northwest  from  and  tributary  to  Chicago. 
These  roads  are  controlling  a  larger  and  larger  proportion  of  local 
business,  ditigating  the  ardor  of  competition,  and  the  absorption 
of  the  Burlington  road  by  the  Great  Northern  and  Northern  Pacific 
companies  has  altered  the  status  of  affairs  very  considerably.  The 
possibilities  of  consolidation  of  these  independent  ''granger"  prop- 
erties are  perhaps  more  remote  than  in  any  other  part  of  the  coun- 
try. In  the  Southwest,  last  of  the  five  territorial  groupings,  there 
is  strong  evidence  of  a  tendency  toward  consolidation.  This  seems 
to  be  progressing  under  the  dominant  influence  of  the  so-called 
Gould  properties,  notably  the  Missouri  Pacific  and  the  Iron  Moun- 
tain Railway.  These  roads  if  closely  affiliated  in  interest  with  th6 
Denver  and  Rio  Grande,  which  has  just  absorbed  the  Rio  Grande 
Western  and  the  Colorado  Southern,  would  constitute  a  vast  net- 
work.    The  five  groups  already  described  leave  but  one  remaining 


19 

— namely,  the  transcontinental  lines.  These  railroads,  five  in  num- 
ber, have,  with  the  exception  of  the  Atchison,  Topeka  and  Santa 
Fe,  been  recently  brought  distinctly  under  the  community-of-owner- 
ship  policy  of  operation.  That,  in  fact,  is  the  significance  of  the 
developments  in  the  Northern  Pacific  directorate.  The  situation  in 
this  territory  has  been  vastly  improved  by  these  developments.  In 
the  first  place,  the  anomaly  of  the  control  of  the  Central  Pacific 
from  Ogden  to  San  Francisco  by  a  railroad  entirely  independent  of 
the  Union  Pacific,  which  alone  enters  Ogden  from  the  east,  has  been 
eliminated.  To  be  sure,  California  still  remains  under  practical 
monopoly  of  the  Southern  Pacific  Company,  but  a  transfer  of  the 
Central  Pacific  to  the  Union  Pacific  would  be  a  natural  and  desira- 
ble outcome  of  the  recent  consolidations.  At  the  latest  writing  it 
appears  that  the  Union  Pacific  Railroad  interests  dominate  the  en- 
tire transcontinental  situation,  and  by  so  doing  will  be  able  to  direct 
their  affairs  along  a  definite  and  harmonious  policy. 

THE  EFFECT  OF  CONSOLIDATION  UPON  FREIGHT  RATES. 

Three  possible  effects  of  railroad  consolidation  upon  freight 
rates  are  discernible.  The  first  is  that  they  will  undoubtedly  tend 
to  steady  rates  and  to  eliminate  personal  discrimination  and  rate 
cutting.  The  second  is  that  they  tend  to  retard  the  fall  of  freight 
rates  and  perhaps  even  to  induce  an  actual  advance.  The  third  is 
that  they  may  operate  profoundly  to  modify  the  adjustment  of 
freight  rates  as  between  different  cities,  markets,  and  sections  of 
the  country.     These  may  be  considered  seriatim. 

* 

EFFECT  ON  DISCRIMINATIONS. 

It  can  not  be  denied  that  a  most  beneficent  result  of  railroad 
consolidation  will  be  the  probable  elimination  of  the  temptation  or 
even  necessity  of  granting  special  rates  to  favored  shippers.  This 
is  discussed  in  another  connection,  as  also  the  question  as  to 
whether  the  legalization  of  railroad  pools  might  not  have  produced 
the  same  beneficent  result.  The  difference  between  the  two,  how- 
ever, is  that  consolidation  once  effected  becomes  permanent, 
whereas  pooling  agreements  permit  of  readjustment  from  time  to 
time  to  suit  changed  conditions.  Accepting,  however,  the  recent 
developments  as  a  fact  and  not  as  an  alternative,  it  must  be  con- 
ceded that  the  elimination  of  the  power  to  compete  will  at  the  same 
time,  in  the  words  of  the  chairman  of  the  Interstate  Commerce  Com- 
mission, ''eliminate  the  power  to  discriminate."  For  the  first  time 
the  railroads  may  effectively  present  a  united  front  to  industrial 
combinations,  or  to  the  large  shipper  who  seeks  to  compel  conces- 
sions under  threat  of  a  diversion  of  his  business  to  a  rival  line. 

EFFECT  ON  LEVEL  OF  RATES. 

As  to  the  second  effect  upon  rates,  namely,  that  consolidation 
opens  the  way  to  a  higher  range  of  charges,  it  appears  that  the 
events  of  the  last  two  years  lend  force  to  this  objection.  Again 
^quoting  from  the  Interstate  Commerce  Commission: 


20 

'^It  is  idle  to  say  that  freight  rates  can  not  be  advanced.  During; 
the  past  year  they  have  been,  by  concerted  action  upon  a  vast  vol- 
ume of  traffic,  advanced  in  everp  part  of  this  country.  It  is  equally 
idle  to  say  that  they  will  not  be  advanced.  It  is  both  human  nature 
and  the  lesson  of  history  that  unlimited  power  induces  misuse  of 
that  power.  Eailways  are  not  combined  for  the  purpose  of  "extor- 
tion and  abuse,"  but  none  the  less  should  the  people  provide  some 
protection  from  that  possible  result  of  the  combination." 

It  may  confidently  be  asserted  that  at  no  time  in  the  history  of 
American  railroads  has  the  need  of  eflScient.  wise,  and  firm  super- 
vision by  public  authority  of  the  terms  and  conditions  of  transpor- 
tation been  more  imperatively  demanded  than  at  the  present  time. 
It  may  be  conceded,  of  course,  that  so  far  as  local  rates  are  con- 
cerned, these  consolidations  do  not  change  the  situation  in  the  least. 
Local  freight  rates  are  the  result  of  a  monopoly,  except  in  so  far, 
as  we  shall  see  later,  as  it  becomes  the  interest  of  the  railroad  to 
develop  its  business  by  wise  concessions.  Where  the  consolidation 
most  probably  invites  the  maintenance  or  even  the  advance  of 
freight  rates  is  upon  the  great  volume  of  through  traflflc.  Upon  this 
vast  aggregate  tonnage  an  addition  of  a  few  mills  per  hundred 
pounds  amounts  to  an  enormous  increase  of  revenue  to  the  rail- 
roads; and  the  difference  of  those  few  mills  is  too  slight  to  make 
or  to  mend  the  conditions  of  competition  in  foreign  markets.  In 
other  words,  there  is  a  possibility  that  the  revenues  of  the  road  may 
be  enormously  increased  directly  at  the  expense  of  the  producer, 
and  especially  of  the  farmer,  unless  some  wise  regulation  be  en- 
forced. 

EFFECT  ON  ADJUSTMENTS  BETWEEN  LOCALITIES. 

The  third  and  very  serious  effect  of  railroad  consolidation  will 
undoubtedly  be  to  modify  the  present  rate  adjustments  as  between 
American  cities  and  producing  centers.  This  is  particularly  the  case 
with  the  consolidation  of  the  great  trunk  lines  of  the  country.  Small 
roads  with  local  interests  are  often  closely  identified  with  the  wel- 
fare of  favored  cities,  and  the  absorption  of  these  local  roads  may 
profoundly  affect'the  status  of  rates  made  to  those  places.  Thus,  for 
instance,  almost  all  the  great  seaports  of  the  country  have  been  de- 
veloped by  the  direct  interest  of  particular  trunk  lines.  Baltimore 
dates  its  origin  as  a  great  seaport  from  the  prosperity  of  the  Balti- 
more and  Ohio  Railroad.  The  Boston  and  Albany  Railroad  has 
contributed  enormously  to  the  development  of  Boston.  New  Or- 
leans, so  far  as  its  export  business  is  concerned,' owes  much  to  the 
Illinois  Central  Railroad.  Mobile  owes  its  prominence  to  the  Mobile 
and  Ohio  Railroad,  which  always  worked  primarily  for  the  inter- 
ests of  its  own  territory.  Suppose,  now,  that  these  roads  with  local- 
ized interest  are  merged  in  great  consolidations,  which  are  even  less 
mindful  of  local  interests  than  the  original  railroad  corporation. 
The  Southern  Railway,  operating  lines  to  a  half  dozen  seaports,  has 
no  longer  a  particular  interest  in  making  the  Mobile  and  Ohio  road 
serve  its  former  constituency.  The  Chesapeake  and  Ohio,  now 
transferred  to  the  Pennsylvania  system  centering  in  New  York  and 


21 

Philadelphia,  is  no  longer  engaged  in  developing  exclusively  the 
port  of  Newport  News.  Even  Boston,  as  voiced  by  the  opinion  of 
its  legislators,  hesitated  a  long  time  before  committing  its  interests 
in  the  export  business  over  the  Boston  and  Albany  Railroad  to  the 
control  of  the  New  York  *  Central,  which  has  always  made  for  the 
prosperity  of  New  York. 

This  readjustment  of  traffic  relations  may  operate  in  still  an- 
other way.  The  greatest  revenue  of  a  railroad  is,  of  course,  always 
obtained  by  securing  the  longest  possible  haul.  Th.e  longest  possible 
haul  that  a  road  prorating  with  another  road  can  have  arises  when 
business  originates  at  one  terminus  of  the  line.  This,  in  fact,  is  one 
of  the  reasons  for  the  prominence  of  the  Southern  Pacific  Company 
in  transcontinental  business — that  by  reason  of  its  steamship  line 
tq  New  Orleans  it  carries  the  goods  from  New  York  to  San  Fran- 
cisco without  prorating.  This  influence  causes  transcontinental 
lines  to  endeavor  strongly  to  build  up  manufactures  and  jobbing 
trade  at  their  eastern  termini — St.  Louis,  Chicago,  or  St.  Paul.  This 
is  the  reason  to-day  why  those  cities  have  all  been  given  precisely 
the  same  rate  to  the  Pacific  coast  which  is  enjoyed  by  New  York, 
Philadelphia,  or  Boston.  Suppose,  now,  that  these  transcontinental 
lines  affiliated  so  strongly  with  the  eastern  trunk  lines  as  to  transfer 
virtually  their  eastern  termini  from  the  Mississippi  to  the  Atlantic 
seaboard;  or  that  the  Missouri  Pacific  system,  through  th.e  Wa- 
bash road  into  Pittsburg,  secures  a  terminus  east  of  St.  Louis,  is 
it  not  plain  that  such  a  system  of  roads  could  make  more  money  by 
hauling  goods  from  its  uttermost  eastern  termini  rather  than  from 
what  would  now  be  an  intermediate  point  on  the  Mississippi  River? 
Or  take  another  example:  Atlanta,  Ga.,  has  undoubtedly  been  built 
up  by  railroad  competition.  There  is  no  geographical  reason  for  its 
present  prominence,  either  in  the  fertility  of  the  surrounding  section 
or  the  presence  of  waterways.  The  fact  is  that  Atlanta  happened 
to  be  the  terminus  of  roads  entering  the  South  from  the  Vir- 
ginia gateways,  and  also  the  terminus  of  roads  coming 
in  from  the  seacoast  at  •  Savannah.  The  Western  and  At- 
lantic Railroad,  built  by  the  State  of  Georgia  as  an  out- 
let to  Cincinnati  and  Louisville,  also  ended  at  Atlanta. 
Each  one  of  these  roads  got  its  maximum  revenue  by 
stimulating  business  at  its  terminal  point.  The  best  way  to  stimu- 
late this  business  was  to  give  peculiarly  advantageous  rates.  In 
the  case  of  Atlanta  they  do  not  seem  to  have  been  made  public,  but 
there  is  little  doubt  that  private  rebates  have  made  up  for  many 
disabilities  in  the  published  tariffs.  Of  course  this  is  only  one  fac- 
tor in  the  growth  of  a  city.  Enterprise  and  abundant  capital  have 
been  extremely  influential.  Now,  let  us  suppose  that  the  Southern 
Railway  system,  instead  of  ending  at  Atlanta,  extends  its  lines 
from  Washington  to  New  Orleans,  absorbing  practically  all  of  the 
formerly  competing  lines.  Atlanta  now  becomes  a  way  station.  It 
is  a  great  city,  with  an  established  reputation,  prosperous  manu- 
factures, commercial  enterprise,  etc.  Is  it  not  possible  that  the  rail- 
road factor  may  be  considerably  modified?  Such  would  seem  to  be 
a  conservative  view  to  take  of  the  matter. 


22 


NATURE  AND  EFFECTS   OF   RAILROAD   COMPETITION. 

Competition  as  the  life  of  trade  has  been  extolled  by  all  eco- 
nomic writers.  Its  advantages  are  being  eulogized  particularly  in 
this  period  of  tendency,  toward  consolidation.  It  has,  however,  long 
been  recognized  both  in  economic  writing  and  in  law,  that  competi- 
tion between  railroads  is  in  many  respects  different  in  character 
from  competition  in  other  forms  of  industry.  Several  of  these 
points  of  difference  may  be  mentioned  in  this  connection.  They 
almost  all  turn  upon  the  essential  fact,  that  a  large  proportion  of 
railroad  expenditures  are  entirely  independent  of  the  amount  of 
business  done.  The  first  of  these  peculiarities  of  railroad  competi- 
tion is  that  it  does  not  lead  to  the  survival  of  the  fittest  as  a  rule. 
The  poorest  equipped,  the  most  circuitous,  and  most  nearly  insol- 
vent road  is  often  able  to  dictate  terms  to  the  standard  and  most 
direct  trunk  line.  This  has  been  exemplified  time  and  again  in  the 
history  of  rate  wars  the  world  over.  The  insolvent  road  having  re- 
pudiated its  fixed  charges,  has  nothing  to  lose  by  carrying  business 
at  any  figure  which  will  pay  the  mere  cost  of  haulage.  The  indirect 
line,  having  no  business  at  the  outset,  has  nothing  to  lose.  Any 
little  contribution,  therefore,  to  fixed  expenses  is  welcome,  even  at 
an  infinitesimal  profit;  at  which  rate,  applied  to  all  their  traffic,  the 
direct  lines  would  speedily  become  bankrupt.  The  inevitable  result 
in  all  such  cases  is  that  the  greatest  damage  in  competition  is  in- 
flicted upon  the  strongest  competitor.  That  it  is  which  forecs  it 
oftentimes  to  subsidize  or  purchase  its  weaker  rivals.  A  corollary 
to  the  peculiarity  of  railroad  competition  above  mentioned  is  that 
it  almost  always  involves  discrimination.  Competition  in  industry 
usually  induces  equality  of  prices.  Among  railroads,  however,  the 
rival  road,  either  by  indirection  or  bankruptcy,  is  the  one  which 
makes  and  takes  secret  concessions  in  rates  in  a  wild  endeavor  to 
secure  business  at  anything  above  the  mere  cost  of  haulage. 

So  profoundly  modified  are  all  the  conditions  of  railroad  compe- 
tition, in  contrast  with  those  in  industry,  that  it  has  frequently  been 
asserted  that  a  railroad  is  essentially  a  monopoly  in  any  case.  So  far 
as  local  business  as  distinct  from  through  traffic  is  concerned,  this 
is  undoubtedly  true.  It  is  also  true  in  respect  of  traffic  in  which  com- 
petition is  direct  enough  to  permit  of  pooling  or  a  division  of  the 
business  upon  satisfactory  terms.  Every  tendency  toward  consoli- 
dation, and  especially  the  recent  movement,  taking  the  form  of  di- 
vision of  the  field,  undoubtedly  adds  force  to  this  contention  that 
railroad  charges  are  essentially  monopolistic  in  character.  To  at- 
tempt to  perpetuate  competition,  however,  in  an  industry  in  which, 
as  has  been  almost  universally  recognized,  equal  competition  is  the 
exception  and  not  the  rule,  must  be  the  part  of  folly.  The  only  al- 
ternative is  to  recognize  the  conditions  as  they  exist.  If  the  rail- 
road business  is  a  monopoly,  its  charges  being  determined  in  ac- 
cordance with  the  principles  that  apply  to  that  form  of  industrial 
organization,  the  necessity  for  adequate  supervision  and  control  in 
the  public  interest  becomes  all  the  more  patent. 


23 


NECESSITY  AISTD  DIFFICULTIES  OF  REGULATION. 

Such  control  should,  however,  recognize  the  fact  that  the  condi- 
tions are  highly  complex,  and  that  no  simple  and  general  rules  can 
be  made  to  govern  in  all  instances.  The  very  complexity  of  the 
problem  emphasizes  the  necessity  for  intelligent  direction.  To 
foster  salutary  competition  between  trade  centers,  for  instance,  and 
to  eliminate  at  the  same  time  the  grasping  desire  of  unqualified 
competitors  to  participate  in  business  which  properly  belongs  to 
others,  should  be  one  of  the  ends  contemplated  by  such  control. 
Nevertheless  it  should  be  recognized  that  the  interrelation  of  roads 
by  all  possible  routes  between  producing  and  consuming  centers  is 
so  delicately  adjusted  that  to  interfere  with  one  road  is  always 
liable  to  disturb  the  balance  of  power  throughout  the  whole.  The 
delicacy  of  the  rate  adjustment  which  has  resulted  from  years  of 
conflict,  discussion,  and  compromise  between  the  railroads  con- 
stitutes one  of  the  strongest  reasons  for  supervision  by  some  com- 
petent authority.  Abuses  or  maladjustments  of  rates,  which  the 
railroads  can  not  remedy  themselves,  make  supervision  by  some 
disinterested  party  all  the  more  necessary. 

Oftentimes  traffic  managers  are  not  free  to  grant  reductions  of 
freight  rates,  which  they  themselves  acknowledge  to  be  just,  by 
reason  of  the  opposition  of  competing  lines.  In  most  parts  of  the 
country  the  rates  to  important  points  are  delicately  adjusted  as  be- 
tween all  of  the  lines  which  directly  or  indirectly  serve  a  particu- 
lar place.  The  consent  of  every  one  of  these  interests  is  necessary 
in  order  to  insure  stability  of  rates;  and  no  single  road  is  free  to  act 
independently,  under  penalty  of  a  rate  war  which  may  not  only 
disastrously  affect  its  relations  with  connecting  lines,  but  also  re- 
sult in  an  active  invasion  of  its  own  territory.  Thus,  for  example, 
in  the  Southern  States,  let  us  suppose  that  the  Southern  Railway 
is  willing  to  concede  as  a  measure  of  justice  a  reduction  of  rates  on 
cotton  from  Mississippi  River  points  to  the  cotton  mills  in  North 
and  South  Carolina.  The  moment  that  it  offers  to  do  this,  lines 
competing  with  it  on  traffic  to  New  England,  or  to  the  seaports  for 
export  business,  threaten  wholesale  reductions  wliich  would  seri- 
ously affect  the  general  revenues  of  the  Southern  Railway  as  a 
system. 

RAILROAD     DISCRIMINATION     AND     INDT»STRIAL     COMBINA- 
TION. 

It  is  incontestable  that  many  of  the  great  industrial  combina- 
tions had  their  origin  in  railroad  discrimination.  This  has  been  em- 
phasized many  times  in  the  history  of  ihe  Standard  Oil  Company 
and  of  the  great  monopolies  dealing  in  live  stock,  dressed  beef,  and 
other  products.  These  facts  are  matters  of  past  history.  It  is  im- 
portant to  inquire,  however,  whether  the  more  recent  industrial 
combinations  are  able  to  command  the  same  advantages  over  their 
competitors  in  the  matter  of  railroad  transportation  as  were  en- 
joyed by  the  earlier  trusts.    Information  upon  this  point  is  exceed- 


24 

inglv  difficult  to  obtain.  It  involves  proof  of  criminal  conduct  in 
the  giving  or  taking  of  rebates  or  concessions,  and  is  open  to  all  the 
difficulties  of  detection  already  described.  If  such  concessions  exist 
at  the  present  time  they  seem  to  be  made  rather  by  manipulation 
of  the  freight  tariffs  and  classifications  than  by  direct  granting  of 
special  rates  or  rebates. 

The  assertion  has  been  made  before  the  Industrial  Commission 
that  the  recent  advances  of  freight  rates  of  1900  have  touched  more 
lightly  upon  the  commodities  handled  by  some  of  the  great  combi- 
nations. Thus,  for  instance,  in  the  case  of  coffee  a  different  classi- 
fication prevails  for  the  green  and  roasted  product.  The  first  of 
these  was  apparntly  advanced  by  changes  in  the  Official  Classifica- 
tion and  the  other  not.  It  has  been,  asserted  that  the  effect  of  this 
has  been  to  prevent  competition  on  the  part  of  coffee  roasters  at 
local  centers.  The  adjustment  of  tariffs  in  order  to  favor  the  Stand- 
ard Oil  Company  has  been  asserted  before  the  Industrial  Commis 
sion  by  a  member  of  the  Interstate  Commerce  Commission.  Thus 
it  is  claimed  that  reductions  of  freight  rates  on  oil  to  shippers  by 
tank  cars  have  been  prevented,  in  face  of  the  general  fall  upon  all 
other  classes  of  commodities.  It  is  asserted  by  the  same  witness 
that  the  rates  upon  oil  shipped  in  this  way  by  companies  controlling 
great  pipe  lines  are  so  adjusted  as  to  be  prohibitive  to  competitors 
at  many  places.  New  Haven  territory,  for  example,  is  specified  as 
practically  closed  to  all  competitors  who  have  not  the  facilities 
which  the  peculiar  adjustment  of  rates  and  classification  affords  to 
the  Standard  Oil  Company.  The  same  thing  is  said  to  be  true  at 
New  Orleans. 

PRIVATE  CAR  SHIPMENTS. 

Another  industrial  combination  which  seems  to  have  been  able 
to  dictate  terms  to  the  railroads  is  that  of  the  live-stock  and  dressed- 
beef  firms  at  Chicago,  Kansas  City,  and  other  points.  The  situation 
is  aptly  described  by  Hon.  Augustus  Schoonmaker,  then  a  member 
of  the  Interstate  Commerce  Commission,  as  follows: 

"Investigations  made  by  the  Interstate  Commerce  Commission 
at  different  times  have  disclosed  at  some  extent  the  very  large 
sums  received  by  shippers  as  mileage  for  the  use  of  such  cars." 

"By  an  investigation  made  in  1881)  it  appeared  that  on  a  single 
line  of  road  between  Chicago  and  an  interior  Eastern  point — a  dis- 
tance of  470  miles — refrigerator  cars  owned  by  three  shipping  firms 
made  in  nine  months,  from  August  1,  1888,  to 'May  1,  1889,  7,428,400 
miles,  and  earned  for  mileage  |72,945.97,  being  about  |8,112  a 
month,  or  substantially  at  the  rate  of  $100,000  a  year." 

"By  another  investigation,  made  in  1890,  it  appeared  that  pri- 
vate stock  ca-rs'to  the  number  of  250  had  been  used  upon  a  line 
made  up  of  two  connecting  roads  between  Chicago  and  New  York, 
beginning  with  150  cars  on  September  1,  1880,  increased  30  more  a 
month  later,  20  more  another  month  later,  and  reaching  the  total  of 
250  in  June,  1890;  that  the  cars  altogether  had  cost  |156.500,  and 
had  earned  for  mileage  in  two  years,  from  September  1.  1888,  to 
September  1,  1890,  |205,582.68;'that  the  entire  expense  to  be  de- 


25 

ducted  during  that  period  for  car  repairs  and  salaries. for  tlieir  man- 
agement was  ,134,050.48,  leaving  net  revenue  to  the  amount  of 
1171,532.20,  being  an  excess  of  $15,032  above  the  whole  cost  of  the 
cars.  The  cars  were  therefore  paid  for  and  a  margin  besides  in  two 
jears,  and  thereafter,  under  the  same  management  and  with  a  cor- 
responding use  of  the  cars,  an  income  of  upward  of  |100,000  a  year 
was  assured  on  an  investment  fully  repaid,  or,  in  effect,  on  no  in- 
vestment whatever." 


"A  single  railroad  company,  as  shown  by  its  official  report  for 
1889,  paid  car  mileage  to  65  different  companies  and  firms  owning 
cars,  of  which  54  were  shippers  and  the  remaining  11  fast-freight 
organizations." 


188(5. 

1893. 

Total  nnniber  of  all  descriptions " 

1,000 

5,600 

Proportion  at — 

First  class,  75  cents 

Per  cent 
32 
24 
11 

Per  cent. 
22 

>^econd  class,  fi5  cents 

Third  class,  50  cents     .    

12 

19 

67 

53 

Fourth  class,  .36  cents. 

31 
2 
0 

19 

Fifth  class,  30  c  ents 

23 

Sixth  class,  25  cents 

5 

33 

47 

(Kates  used  are  from  New  York  to  Chicago.) 

''More  explicitly  stated,  in  1886,  67  per  cent,  or  670,  of  the  1,000 
articles  were  charged  50  cents  per  hundred  and  higher;  in  1893  the 
actual  number  is  shown  to  be  higher,  although  the  proportion  at 
the  rates  of  the  higher  classes  is  very  much  less.  The  number  in 
1886  charged  a  rate  of  35  cents  per  hundred  and  lower  was  only 
330,  or  33  per  cent;  in  1893  it  is  seen  that  this  number  is  increased 
to  2,630,  or  47  per  cent.  Another  form  of  comparison  shows  the 
average  rate  of  all  descriptions  in  1886  as  63  cents,  against  48  cents 
in  1893,  or  a  reduction  of  15  cents  per  hundred  pounds. — Reprinted 
in  McCain,  Compendium  of  Transportation  Theories,  page  193." 

The  origin  of  this  system  of  private  cars  seems  to  have  been 
partly  in  the  failure  or  inability  of  the  carriers  to  provide  adequate 
facilities.  Whether  conditions  have  so  far  changed  as  to  justify 
the  continuance  of  the  practices  so  generally  at  present  may  be 
open  to  question. 

A  number  of  railroad  witnesses,  including  several  railroad 
presidents,  have  testified  to  the  iniquitous  practices  which  prevail 
in  respect  of  the  shipment  of  goods  by  private  cars.  It  is  difficult 
to  determine  whether  conditions  are  improving  or  not  in  this  re- 
spect.    While  the  so-called  fast-freight  lines  still  operating  over 


26 

some  of  the  trunk  lines  are  in  existence,  they  seem  to  have  assumed 
simply  the  nature  of  through  routes.  The  Merchants'  Despatch 
Transportation  Company,  the  Blue  and  White  lines,  etc.,  seem  to  be 
rather  trade-marks  for  certain  service  than  independent  corpora- 
tions enjoying  particular  rights  and  privileges.  The  number  of  cars 
controlled  by  them  does  not  seem  to  be  on  the  increase.  Thus, 
44,000  of  them  in  1894  have  increased  to  only  45,000  in  1899,  accord- 
ing to  the  official  statistics.  On  the  other  hand,  the  private  cars 
owned  by  refrigerator  companies,  either  for  the  transportation  of 
dressed  beef  to  the  seaboard  or  of  fruit  from  California  to  the  East, 
seem  to  be  on  the  increase.  The  system  seems  to  be  one  of  pay- 
ment of  mileage  by  the  railroads  for  the  use  of  the  cars.  In  some 
cases  as  much  as  three-fourths  of  a  cent  a  mile  is  paid.  It  often 
amounts  to  6  mills  per  mile,  which  is  the  sum  which  railroads  pay 
one  another  for  the  use  of  cars.  Under  special  conditions  there 
seems  to  be  justification  for  the  existence  of  this  system  of  private 
ownership  of  cars,  especially  where  great  cleanliness  is  required, 
where  the  cars  can  not  be  used  for  return  lading  for  any  other  sort 
of  traffic,  etc.;  but  the  iniquity  of  the  system  lies  in  the  exaction 
from  the  railroads  of  a  higher  mileage  than  the  service  is  worth. 
This  tax  or  rebate  operates,  of  course,  to  injure  both  the  roads  and 
rival  concerns.  As  an  illustration  of  the  power  which  some  of  these 
monopolies  possess  to  dictate  terms  to  the  railroads,  the  testimony 
of  such  men  as  President  Callaway,  of  the  New  York  Central,  before 
the  Industrial  Commission  was  to  the  effect  that  most  roads  would 
gladly  abolish  the  system  if  it  were  possible,  but  that  so  long  as 
certain  competitors  granted  the  privilege  it  must  be  accorded  by 
all.  In  respect  of  the  California  fruit  cars,  the  railroads  do  not 
seem  to  feel  the  burden,  and  their  representatives  uphold  the  prac- 
tice. On  the  other  hand,  certain  events  of  1901,  such  as  the  appar- 
ent absorption  of  these  fruit-car  companies  by  the  Armour  inter- 
ests of  Chicago,  thus  constituting  an  absolute  monopoly  of  the 
refrigerator  business,  may  arouse  more  opposition  in  due  time.  One 
of  the  most  encouraging  signs  of  the  times  is  the  decided  stand 
taken  by  the  carriers  against  the  continuance  of  the  practices  which 
they  themselves  originated  twenty  years  ago. 

STABLE  AND  EQUAL  RATES  VERSUS  LOW  RATES. 

Eepresentatives  of  commercial  organizations  and  shippers  in 
general  have  universally  testified  that  stable  and  equal  rates  are 
much  more  to  be  desired  than  a  lower  range  of  rates  as  a  whole, 
open  to  the  possibility  of  fluctuation  or  discrimination.  So  long  as 
all  shippers  pay  the  same  amount  for  equal  service,  and  so  long  as 
rates  are  steady,  so  that  contracts  may  be  confidently  based  upon 
them,  the  absolute  amount  paid,  be  it  high  or  low,  is  of  relatively 
small  importance  to  the  shipper,  for  it  is  at  once  reflected  in  the 
price  which  is  levied  upon  the  consumer.  The  consumer,  on  the 
other  hand,  does  not  benefit  by  fluctuating  rates,  which  vary  greatly 
as  between  competitors,  by  means  of  rebates  and  secret  concessions, 
because  the  price  which  he  pays  for  the  goods  consumed  is  made 
usuallj^  by  the  dealer  who  operates  under  the  greatest  disadvant- 


27 

age;  that  is  to  say,  cuts  in  freight  rates  tend  to  yield  inordinate 
profits  to  the  middleman  who  receives  them,  rather  than  to  lower 
the  price  of  those  goods  to  the  public  as  a  whole. 

FREIGHT  RATES  AND  PRICES. 

The  Industrial  Commission  has  collated  a  large  amount  of  tes- 
timony concerning  the  relation  which  exists  between  the  price  of 
products,  either  to  the  producer  or  the  consumer,  and  freight  rates 
exacted  by  the  railroads.  On  the  other  hand,  it  has  been  contended 
that  prices  are  made  by  commecial  conditions,  irrespective  of  the 
action  of  the  carriers;  that,  in  other  words,  an  increase  of  freight 
rates  to  the  farmer,  let  us  say,  does  not  operate  to  reduce  the  price 
of  his  product  or  to  increase  the  cost  to  the  consumer.  The  opposite 
of  this  contention  has  been  frequently  represented;  namely,  that 
any  increase  of  freight  rates  does,  and  must  of  necessity,  constitute 
a  large  added  tax  upon  the  consumer;  so  that,  as  a  result,  the  deter- 
mination of  the  reasonableness  of  railroad  rates  becomes  a  question 
of  interest  alike  to  the  shipper  and  to  the  public.  One  point  is  be- 
yond peradventure  true,  an  increase  of  freight  rates  must  come  out 
of  somebody.  The  excess  taken  either  reduces  the  price  to  the 
producer,  increases  the  price  to  the  consumer,  or  reduces  the  profits 
of  the  middleman.  The  whole  matter  seems  to  turn  upon  the  ques- 
tion whether  the  change  in  the  freight  rate  be  general,  applying  to 
all  the  carriers  of  the  country  at  once,  or  whether  it  be  local  and 
special  in  character.  The  case  is  analogous  to  that  of  the  imposi- 
tion of  a  special  as  against  a  general  tax.  The  distinction  between 
conditions  applying  to  commodities  whose  prices  is  made  in  a  for- 
eign market,  as  distinct  from  a  domestic  one,  must  also  be  kept 
clear. 

The  price  of  grain,  which  is  made  at  Chicago,  results  from  an 
equilibration  of  demand  and  supply.  Farmers  from  all  parts  of  the 
West  must  sell  their  products  to  middlemen,  who  have  in  view  re- 
selling that  product  at  this  market  price  in  order  to  turn  a  small 
profit  for  themselves  thereby.  If  a  particular  road,  therefore,  ar- 
bitrarily increases  its  freight  rates,  it  would  seem  clear  that  the 
farmers  throughout  the  section  of  country  affected  must  suffer  to 
an  amount  equal  to  the  increase  of  the  freight  rate  made.  They,  in 
other  words,  are  obliged  to  put  their  product  upon  the  Chicago 
market  in  competition  with  farmers  on  all  the  other  railroads  lead- 
ing to  that  center.  The  balance  of  rates  has  supposedly  been  ef- 
fected after  long  experience,  in  order  to  equalize,  so  far  as  may  be, 
the  local  conditions  which  exist.  An  increase  of  freight  rates  in 
such  a  case  is  precisely  analogous  to  the  imposition  of  a  special 
local  tax;  and  variations  of  freight  rates  sectionally  may  stimulate 
or  depress  business,  affect  profits,  and  by  so  doing  change  values. 
The  aggregate  change  of  property  valuations,  representing,  as  al- 
ways, the  capitalization  of  net  return,  may  consequently,  by  reason 
of  a  small  change  in  freight  rates,  become  exceedingly  great.  If, 
on  the  other  hand,  the  change  of  freight  rates  be  universal,  subject- 
ing all  carriers  to  the  same  conditions,  it  is  difficult  to  see  how  the 


28 

price  of  the  product  to  the  farmer  can  be  appreciably  changed, 
except  in  the  case  that  the  market  price  at  Chicago  so  far  dominates 
the  world's  marliet  that  an  increase  of  price  at  Chicago,  we  will 
saj,  of  one  cent  a  bushel,  operates  to  increase  the  price  of  the  prod- 
uct at  Liverpool  by  an  equal  amount.  If  the  price  at  Chicago  be, 
however,  determined  locally,  with  an  eye  single  to  the  equilibrium 
of  domestic  demand  and  supply,  it  would  appear  as  if  the  effect  of 
such  an  increase  of  freight  rates  would  be  to  add  the  freight  rate 
to  the  price  which  the  consumer  must  pay.  What  more  probably 
happens,  in  the  majority  of  cases,  is  that  the  loss  is  divided  between 
the  two — the  producer  and  consumer.  In  any  event,  it  is  not  of  par- 
ticular importance  to  trace  the  exact  incidence  of  such  an  increase. 
The  public  interest  is  involved  as  much  in  the  increase  of  price  to 
the  consumer  as  in  a  reduction  of  profits  to  the  producer.  Only  in 
the  event  above  mentioned — that  the  Chicago  market  controls  the 
price  for  the  world's  product — is  it  to  be  expected  that  an  appreci- 
able part  of  the  burden  of  an  increase  of  rates  may  be  shifted  upon 
a  public  other  than  that  of  the  United  States. 

IMPORT  RATES. 

The  question  involved  in  the  so-called  import  and  export  cases 
is  that  of  the  reasonableness  of  charging  lower  rates  on  goods 
originally  shipped  from  or  destined  to  domestic  points,  than  are 
charged  for  similar  goods,  over  the  same  lines  and  for  the  same  dis- 
tances, when  brought  from  or  destined  to  foreign  countries.  Thus, 
for  instance,  in  the  case  of  cotton  cloth  shipped  by  way  of  Pacific 
ports  to  the  Orient,  the  practice  is  not  uncommon  of  charging  a  less 
rate  to  San  Francisco  for  the  transportation  of  goods  ultimately 
destined  for  export  than  is  charged  on  similar  goods  which  are  to 
be  unloaded  for  consumption  at  San  Francisco  or  other  California 
points.  Or,  reversing  the  case,  this  question  touches  the  reason- 
ableness of  transporting  goods  from  New  York  to  Chicago  at  a 
lower  rate,  if  they  have  been  brought  in  from  Europe,  than  is 
charged  for  similar  service  in  the  case  of  goods  that  have  originated 
at  or  near  New  York.  Cases  of  this  description  have  become  in- 
creasingly frequent  during  the  last  ten  years.  The  first  and  most 
important  one,  upon  which  both  the  Interstate  Commerce  Commis- 
sion and  the  United  States  Supreme  Court  have  passed,  originated 
in  proceedings  before  the  Interstate  Commerce  Commission,  brought 
by  the  New  York  Board  of  Trade  of  Transportation  against  the 
Pennsylvania  and  other  railroad  companies.  The  case  practically 
raised  the  general  question  whether,  in  the  carriage  of  goods  from 
American  seaports,  carriers  subject  to  the  act  could  lawfully  charge 
less  for  the  transportation  of  imported  than  of  domestic  traffic  of 
like  kind  to  the  same  destination.  The  Commission,  after  careful 
examination,  held  that  such  differences  in  rates  constituted  discrim- 
ination as  against  the  domestic  shipper.  According  to  its  view,  the 
circumstances  and  conditions  pertaining  to  the  carriage  of  freight 
from  a  foreign  port  to  the  United  States  could  not  be  considered  as 
creating  the  dissimilarity  of  conditions  which  alone  would  justify 


29 

a  different  rate  for  like  service  in  the  two  cases.  The  Commission 
held  that- 
One  paramount  purpose  of  the  act  to  regulate  commerce,  mani- 
fest in  all  its  conditions,  is  to  give  to  all  dealers  and  shippers  tbe 
same  rates  for  similar  services  rendered  by  the  carrier  in  transport- 
ing similar  freight  over  its  line.  Now,  it  is  apparent  from  the  evi- 
dence in  this  case  that  many  American  manufacturers,  dealers,  and 
localities,  in  almost  every  line  of  manufacture  and  business,  are  the 
competitors  of  foreign  manufacturers,  dealers,  and  localities  for 
supplying  the  wants  of  American  consumers  at  interior  places  in 
the  United  States,  and  that  under  domestic  bills  of  lading  they  seek 
to  require  from  American  carriers  like  service  as  their  foreign  com- 
petitors. *  *  *  The  act  to  regulate  commerce  secures  them  this 
right.  To  deprive  them  of  it  by  any  course  of  transportation  busi- 
ness or  device  is  to  violate  the  statute. 

The  -Commission  thereupon  ordered  the  carriers  to  cease  and 
desist  from  making  such  discrimination.  This  order,  while  obeyed 
by  a  number  of  carriers,  was  disregarded  by  the  Texas  and  Pacific 
Kailway,  which  operated  an  import  line  from  Xew  Orleans  to  San 
Francisco.  Upon  application  by  the  Commission  this  case  was  car- 
ried to  the  Supreme  Court  of  the  United  States  for  final  adjudica- 
tion. The  Supreme  Court  decided  that  the  interpretation  of  the 
law  by  the  Commission  w-as  defective,  although  three  members  of 
the  court,  including  the  Chief  Justice,  dissented  from  this  opinion. 
As  an  illustration  of  the  discrimination  which  existed  in  this  case 
it  appeared  that  the  domestic  rate  on  books,  buttons,  carpets,  etc., 
from  New  Orleans  to  San  Francisco  was  |2.88  per  100  pounds, 
while  the  total  through  charge  on  the  same  articles  from  Liverpool 
to  San  Francisco  was  only  |1.07.  The  Supreme  Court  distinctly 
refrained  from  an  opinion  as  to  the  reasonableness  of  these  rates, 
and  contented  itself  with  passing  upon  the  propriety  of  any  differ- 
ence in  rates  whatever.  It  held  that  the  contention  of  the  railroads 
was  sound,  namely,  that  all  circumstances  and  conditions,  whether 
within  the  United  States  or  having  regard  for  ocean  rates  and  for- 
eign competitive  conditions,  must  be  considered.  In  other  words, 
they  recognized  the  validity  of  the  claim  of  the  railroads  that  this 
import  traffic  must  be  taken  at  an  extremely  low  rate  if  at  all,  since 
otherwise  the  goods  would  go  by  water  around  Cape  Horn,  or  by 
another  route.  On  the  basis  of  such  reasoning  it  would  appear  that 
any  contribution  from  low  import  rates  to  the  fixed  charges  of  the 
railroad  would  enable  that  road  to  transport  its  domestic  traffic  at 
a  lower  rate  than  it  otherwise  might.  What,  however,  the  majority 
of  the  court  did  not  add,  although  it  was  developed  by  the  dissenting 
justices,  was  the  fact  that  these  conditions  might  exclude  domestic 
purchasers  entirely  from  certain  markets,  giving  them  over  to  im- 
porters who  could  control  the  market  by  reason  of  the  low  rates  ac- 
corded. Since  this  decision  in  1896  the  railroads  have  still  further 
developed  this  system  of  discrimination.  The  only  safeguard  for 
the  domestic  producer  must  lie,  obviously,  in  some  decision  by  a 
competent  tribunal  as  to  the  amount  of  such  differences  which  may 
reasonably  exist.    The  Supreme  Court  has  upheld  their  validity  as 


30 

a  system,  but  it  still  remains  for  the  amount  of  such  difference 
which  may  be  deemed  reasonable  to  be  determined.  In  case  of  a 
restoration  of  the  powers  of  the  Interstate  Commerce  Commission 
in  the  matter  of  rate  making,  this  would  undoubtedly  be  one  of  the 
first  cases  which  it  would  be  called  upon  to  consider. 

EXPORT  RATES. 

Identical  in  principle  with  the  above  case,  although  presenting 
reversed  conditions,  are  the  so-called  export  rate  cases.  These 
have  to  do  mainly  with  the  rates  charged  on  products  for  domestic 
consumption  as  against  like  products  for  export.  As  an  illustration 
of  the  extent  of  such  differences,  it  has  been  clearly  shown  before 
the  Industrial  Commission  that  at  times  the  freight  rate  on  wheat 
from  Kansas  City  to  Galveston  was  27  cents  per  100  pounds  if  for 
domestic  consumption,  while  the  proportion  of  an  export  rate  for 
a  similar  service  was  10  cents.  The  rate  on  wheat  from?  the  Mis- 
sissippi Eiver  to  New  York  for  domestic  consumption  was  at  times 
20  or  21  cents  per  100  pounds,  while  for  the  same  service  when  the 
goods  were  to  be  exported  the  rate  would  be  13  cents  per  100  pounds. 
This  system  of  stimulating  foreign  business  by  discriminatingly 
low  rates  seems  to  have  attained  large  proportions  only  since  1897. 
The  Interstate  Commerce  Commission  took  cognizance  of  the  sys- 
tem in  a  decision  rendered  in  1899.  It  was  enabled  to  do  so  by  vir- 
tue of  the  Import  Rate  decision  above  cited,  whereby  the  United 
States  Supreme  Court  authorized  it  to  consider  not  only  circum- 
stances and  conditions  within  the  United  States,  but  also  those  re- 
lating to  ocean  transport  and  foreign  competition. 

The  railroads  justify  their  action  on  the  ground  that  only  by 
making  such  concessions  in  export  rates  could  they  lay  down  grain 
in  foreign  markets  in  competition  with  other  parts  of  the  world. 
On  the  other  hand,  it  was  not  made  clear  why  such  competition 
from  foreign  markets  had  become  any  more  acute  in  the  last  few 
years  than  prior  to  that  time.  There  appears  to  be  much  force  in 
the  argument  of  many  shippers,  and  also  of  some  railroad  men, 
that  this  anomalous  condition  of  rates  was  due,  not  so  much  to  the 
keenness  of  foreign  competition,  as  to  the  rivalry  among  the  Amer- 
ican carriers  themselves.  In  other  words,  it  was  said  that  the  com- 
petition between  the  Gulf  ports  and  the  Atlantic  ports  was  re- 
sponsible for  the  abnormally  low  rates  on  export  business.  In  line 
with  this  argument  would  seem  to  be  the  fact  that  it  is  the  rates 
upon  wheat  and  not  upon  flour  for  export,  which  have  decreased 
more  than  in  proportion  to  the  decrease  upon  similar  commodities 
for  domestic  consumption.  It  is  indisputable  that  a  vast  expansion 
of  the  export  business  through  Gulf  ports  has  taken  place  in  the 
last  few  years,  and  the  keenest  rivalry  exists  at  the  present 
time  throughout  a  large  part  of  the  Central  States  between  the  car- 
riers serving  these  export  centers. 

RATES  ON  WHEAT  AND  FLOUR. 

Coupled  with  the  discrimination  against  the  domestic  consumer 
of  grain  was  a  still  further  alleged  discrimination  in  the  freight 


31 

rates  charged  upon  flour.  It  was  clearly  proved,  and  has  been  shown 
by  testimony  before  the  Industrial  Commission,  that  freight  rates 
upon  wheat  for  export  were  at  times  very  much  less  than  the  rates 
upon  flour.  It  was  stated,  for  instance,  that  American  millers 
labored  under  a  disability  of  as  much  as  eight  cents  per  100  pounds 
in  favor  of  their  English  competitors.  This  followed  naturally  from 
the  fact  that  wheat  could  be  transported  to  England  and  there 
ground  much  cheaper  than  it  could  be  ground  in  the  United  States 
and  then  transported.  Inasmuch  as  the  average  profit  is  scarcely 
more  than  two  or  three  cents  per  100  pounds,  it  will  be  seen  that 
this  system  worked  great  hardship  to  American  industry.  It  bore 
with  particular  severity  upon  the  small  millers,  partly  because  their 
cost  of  manufacture  is  more  in  any  event,  and  also  because  any 
limitation  of  export  business  forced  the  large  mills  to  enter  more 
keenly  into  rivalry  for  the  domestic  market.  The  Interstate  Com- 
merce Commission,  after  investigation,  decided  that  the  rates  upon 
flour  should  not  be  more  than  two  cents  higher  per  100  pounds  than 
those  upon  wheat.  This  difference  was  permitted,  however,  on  ac- 
count of  the  greater  cost  of  handling  the  manufactured  product.  It 
is  significant  of  the  present  state  of  the  law  that  the  railroads  have 
paid  no, attention  to  this  order,  and  although  conditions  have  im- 
proved somewhat  there  is  still  great  complaint. 

THE  SOUTHERN  RATE  SITUATION. 

The  freight  rate  adjustment  in  the  Southern  States  is  perhaps 
the  most  unsatisfactory  in  any  part  of  the  country.  This  is  appar- 
ent from  the  fact  that  a  large  and  increasing  proportion  of  the  com- 
plaints before  the  Interstate  Commerce  Commission  have  arisen  in 
this  quarter. 

In  the  first  place,  freight  rates  in  the  Southern  States  are  very 
much  higher  per  mile  than  for  any  other  section  of  the  country. 
Some  appreciation  of  the  difference  in  this  respect  may  be  gained 
from  the'  statement  that,  while  the  distance  from  New  York  io 
Chicago  is  practically  the  same  as  from  New  York  to  Atlanta,  the 
freight  rate  on  first-class  goods  in  the  first  case  is  75  cents  per  hun- 
dred pounds  as  against  |1.14  to  Atlanta.  Differences  scarcely  less 
notable  than  this  may  be  discovered  everywhere  throughout  the 
South.  It  is  indubitable,  however,  that  a  certain  justification  for 
higher  rates  in  southern  territory  exists  by  reason,  first,  of  the 
sparsity  of  population,  which  limits  the  volume  of  local  business 
very  greatly,  and,  secondly,  by  reason  of  the  almost  exclusively 
agricultural  character  of  the  country,  yielding  a  traffic  predomi- 
nantly of  a  low  grade. 

DISCRIMINATION  BETWEEN  EASTERN  AND  WESTERN  CITIES. 

More  serious  than  complaints  as  to  the  absolute  amount  of 
freight  rates  charged  in  the  Southern  States  is  the  allegation  that 
they  are  quite  inequitably  adjusted  as  between  the  different  sec- 
tions of  the  South  itself.  The  whole  situation  in  this  respect  has 
been  thoroughly  ventilated  in  the  well-known  cases  before  the  In 
terstate  Commerce  Commission  known  collectively  as  the  Cincin- 


32 

nati  and  Chicago  freight  bureau  case.  In  essence  this  represented 
the  claim  of  western  cities  to  compete  in  the  Southern  States  on 
equal  terms  with  eastern  centers,  such  as  New  York,  Philadelphia, 
and  Boston.  It  was  claimed  that  an  adjustment  of  rates  as  between 
the  lines  into  the  South  operating  east  and  west  of  the  Allegheny 
range  had  been  made  upon  a  basis  permitting  the  west  to  engage 
in  southern  trade  only  in  respect  of  the  products  of  the  farm  and 
the  field,  reserving  to  the  eastern  centers  the  business  of  supplying 
the  South  with  manufactured  products.  Examination  of  the  evi- 
dence shows  that  apparently  some  such  purpose  was  roughly  out- 
lined under  the  old  Southern  Railway  and  Steamship  Association 
along  in  the  seventies.  It  is  questionable  whether  the  agreement 
ever  took  such  concrete  form  as  has  been  claimed  for  it  by  the  ad- 
vocates of  the  Western  cities. 

Representatives  of  these  commercial  interests  are  undoubtedly 
right  in  their  assertion  that  rates  into  the  South  from  such  points 
as  Cincinnati  and  Chicago  are  relatively  very  much  higher  than  for 
an  equal  distance  from  New  York  and  Boston.  The  amount  of 
these  differences  may  be  appreciated  by  the  fact  that,  whereas  the 
rate  from  Cincinnati'^to  Atlanta,  Ga.,  is  94  per  cent  of  the  rate  from 
New  York  to  Atlanta,  nevertheless  the  distance  from  Cincinnati  i^* 
scarcely  more  than  half  of  that  from  New  York.  Similar  dispro- 
portions may  be  cited  on  every  hand.  It  is  claimed,  however,  and 
seemingly  with  justification,  by  the  carriers,  that  these  lower  rates 
into  the  South  from  Eastern  centers  are  almost  entirely  the  result 
of  cheap  transportation  by  water  down  and  along  the  Atlantic  sea- 
board; that,  in  other  words,  an  inevitable  advantage  is  enjoyed  by 
Philadelphia,  Boston,  and  New  York  in  competition  throughout  a 
large  part  of  the  South  with  Chicago,  St.  Louis,  and  other  Western 
points. 

The  difficulty  with  any  equitable  adjustment  of  rates  in  tht; 
South  appears  to  lie  in  the  friction  which  exists  between  the  affi- 
liated railroads  east  and  west  of  the  Allegheny  range,  as  above 
described.  The  roads  east  of  the  mountains,  such  as  the  Southern 
Railway,  the  Atlantic  Coast  Line,  and  the  Seaboard  Air  Line,  are 
prevented  from  making  certain  concessions,  as,  for  example,  in  the 
rates  upon  cotton  from  Southern  points  north,  merely  by  the  op- 
position of  competing  carriers  up  the  Mississippi  and  Ohio  valleys. 
These  latter  roads,  on  the  other  hand,  seem  willing,  in  order  to 
stimulate  the  business  of  Western  centers,  to  reduce  rates  from 
those  points,  but  are  prevented  from  so  doing  by  threat  of  rate  wars 
from  the  Eastern  lines,  and  especially  those  which  operate  in  con- 
nection with  the  coastwise  steamship  companies.  The  result  is  that 
an  exceedingly  hard  and  fast  adjustment  has  been  secured,  which 
has  permitted  of  no  concessions  on  either  side  without  correspond- 
ing concessions  on  the  other.  Between  the  two,  rates  are  main- 
tained on  practically  the  same  basis,  both  as  to  absolute  figure  and 
relative  proportions,  as  existed  twenty  or  twenty-five  years  ago; 
and  this  in  spite  of  great  changes  in  the  distribution  of  population 
and  of  industry.  A  conclusive  instance  of  this  rigidity  of  rates, 
which  prevents  adaptation  to  changing  conditions,  may  be  found 
in  the  recent  arbitration  of  rates  upon  cotton    from    Mississippi 


A  3^ 

River  points  to  the  cotton  mills  in  the  Carolinas.  It  has  long  been 
notorious  that  these  Southern  mills  were  compelled  to  pay  a  higher 
rate  upon  cotton  from  such  points  as  Memphis  than  was  paid  by 
their  New  England  competitors.  Thus,  for  example,  rates  have  at 
times  been  59  cents  from  Mississippi  points  to  South  Carolina,  while 
they  have  been  only  55|  from  the  same  points  to  New  England.  The 
growth  of  the  textile  industry  in  the  Carolinas  has  resulted  in  a 
consumption  of  cotton  far  exceeding  the  production  within  those 
States.  At  the  same  time  the  increasing  attention  devoted  to  cot- 
ton manufacture  of  the  higher  grades  has  also  compelled  the  manu- 
facturers to  draw  their  supplies  from  more  distant  centers  of  cot- 
ton production.  The  Eastern  railroads,  in  the  light  of  these 
changes,  have  desired  to  equalize  conditions  as  between  the  North- 
ern and  the  Southern  mills;  but  certain  of  the  other  roads,  having 
no  interest  in  the  Southern  mills  and  an  entire  unity  of  interest  in 
the  New  England  industries,  have  sought  to  prevent  any  such  con- 
cessions. 

BASING-POINT  SYSTEM. 

Two  other  peculiarities  of  the  rate  adjustment  in  the  Southern 
States  are,  respectively,  the  widespread  existence  of  low-grade  wa- 
ter competition,  and,  secondly,  the  adoption  of  the  so-called  basing- 
point  system.  These  two  features  of  the  general  rate  adjustment 
are  indissolubly  connected.  The  existence  of  water  competition  is 
alleged  as  a  reason  for  the  persistent  violation  of  the  long  and  short 
haul  clause.  That  clause  is  set  aside  in  order  to  permit  of  the  in- 
stitution of  special  rates  to  favored  localities  which  lies  at  the  bot- 
tom of  the  basing-point  system. 

The  so-called  basing-point  system,  although  not  absolutely  con 
fined  to  the  Southern  States,  has  reached  a  far  higher  stage  of  de- 
velopment there  than  in  any  other  section  of  the  country.  In  prin- 
ciple it  is  simply  this,  that  certain  cities  are  established  as  basing 
points,  and  that  rates  to  all  other  points  in  that  neighborhood  are 
made  by  adding  to  the  through  rate  into  the  basing  point  the  local 
rate  from  that  city  to  the  final  destination.  Since  local  rates  are 
always  exceedingly  high,  this  operates  to  confer  on  the  cities  thus 
established  a  very  great  advantage  in  the  matter  of  charges.  As 
will  be  seen  at  once,  this  system  is  in  direct  opposition  to  the  prin- 
ciples underlying  the  so-called  long  and  short  haul  clause.  Accord- 
ing to  this  section  of  the  Act  to  regulate  commerce,  freight  rates 
should  be  graded  according  to  distance  unless  there  are  some  pecu- 
liar reasons  for  giving  a  lower  rate  to  the  more  distant  point.  This 
principle  is  fully  discussed  in  another  place.  According  to  the  bas- 
ing-point system,  however,  goods  may  be  transported  directly 
through  the  point  to  which  they  are  ultimately  to  be  carried,  and 
after  being  hauled  to  the  basing  point  with  the  charge  for  that  haul, 
thev  mav  be  thereafter  hauled  back  again  with  the  addition  of  a 
high  local  rate  for  the  service.  The  justification  for  this  departure 
from  the  long  and  short  haul  principle,  as  urged  by  the  carriers,  is 
the  existence  of  water  or  other  effective  competition  at  the  places 
that  are  established  as  basing  points.     The  situation  in  the  South 

.3a 


34 

is  peculiar  in  this  respect.  The  entire  territory  is  threaded  with 
a  series  of  more  or  less  navigable  water  courses  which  penetrate 
from  the  sea  or  the  Mississippi  far  into  the  interior.  The  carriers 
allege  that  in  order  to  secure  any  portion  of  the  traffic  to  the  points 
where  water  competition  exists,  low  rates  must  be  made  quite  irre- 
spective of  the  rates  to  intermediate  noncompetitive  points.  They 
affirm  that  to  lower  all  rates  to  the  compelled  competitive  level 
would  deplete  their  revenue  and  inevitably  lead  to  bankruptcy. 

At  this  point  a  distinction  must  be  made,  however,  and  one  not 
clearly  emphasized  in  any  of  the  numerous  decisions  upon  rates  in 
this  territory.  There  seem  to  be  three  distinct  varieties  of  basing 
points.  The  first  of  these  includes  such  cities  as  Savannah,  Ga., 
and  Montgomery,  Ala.,  where  it  is  indisputable  that  effective  com- 
petition by  water,  of  a  general  or  limited  character,  exists.  The 
second  tye  of  basing  point  is  of  railroad  centersi  like  Atlanta  and 
Birmingham.  In  these  cases  there  is  no  water  competition,  but 
the  competition  of  carriers  is  exceedingly  keen  and  operates  over 
such  widely  divergent  routes  that  consolidation  between  them  is 
impossible.  Pooling  being  prohibited  by  law,  the  several  carriers 
must,  as  they  allege,  in  order  to  obtain  a  fair  proportion  of  the  busi- 
ness, make  lower  rates  than  to-  other  places  where  such  conditions 
do  not  exist.  The  third  class  of  basing  points  seems  to  be  abso- 
lutely and  entirely  artificial.  Such  are,  for  example,  a  number  of 
points  in  the  southeastern  part  of  Georgia,  such  as  Cordele,  Ameri- 
cus,  Albany,  etc.  In  these  cases  the  only  criterion  which  seems  to 
have  been  adopted  is  that  the  place  shall  have  attained  a  sufficient 
importance  to  enable  it  to  compel  some  carrier  to  give  it  special 
privileges  in  the  matter  of  rates.  As  was  tersely  stated  in  a  lead- 
ing case — Cordele  at  that  time  not  having  been  made  a  basing 
point — 

"Cordele  is  not  treated  by  defendant  roads  as  a  competitive 
point,  because  it  is  not  a  sufficiently  large  distributing  point,  and  it 
is  not  such  a  distributing  point  because  it  is  not  treated  as  a  com- 
petitive point.  Hence  it  appears  that  the  roads  seek  to  excuse  their 
wrongdoing  by  offering  the  results  of  the  wrong  in  justification. 
Judged  by  its  results,  this  system  of  rate-making  is  at  variance  with 
all  the  equality  provisions  of  the  act  to  regulate  commerce." 

The  subsequent  experience  in  this  case  is  significant.  One  of 
the  carriers  at  Cordele  having  afterwards  discovered  the  advantage 
to  itself  in  making  this  town  a  basing  point,  all  the  other  railroads 
were  compelled  to  acquiesce.  Such  a  thing  has  happened  frequently 
throughout  the  South,  with  the  result  that  many  places  have  been 
given  strongly  preferential  rates  for  no  other  reason  than  the  arbi- 
trary decision  of  some  one  of  the  carriers.  Even  the  railroads  them- 
selves recognize  this  fact.  They  often  deplore  the  necessity  for  re- 
ducing rates  because  of  action  by  competitors  at  some  particular 
point,  but  no  option  remains.  In  justice  to  one  of  the  most  impor- 
tant roads,  however,  namely,  the  Southern  Kailway,  it  should  be 
said  that  the  long  and  short  haul  principle  has  been  recognized  in 
the  main  on  its  through  line  as  far  south  as  Atlanta.  The  principal 
and  most  presistent  opponent  of  the  long  and  short  haul  clause, 
on  the  other  hand,  has  been  the  Louisville  and  Nashville  Railroad. 


35 

One  of  the  worst  evils  of  the  whole  system  is  that  a  refusal  to  ac- 
cord preferential  rates  operates  as  a  penalty  whenever  other  com- 
petitors choose  to  initiate  such  a  policy.  It  is  most  ardently  to  be 
desired  that  at  some  time  a  general  readjustment  of  rates  through- 
out this  territory  may  take  place  in  the  interest  of  equality  and  fair 
dealing. 

The  contrast  between  the  system  in  trunk  line  territory  and  the 
heterogeneous  one  which  prevails  in  the  South  can  not  have  failed 
to  attract  attention.  Realization  of  some  of  the  inequalities  seems 
to  have  led  at  one  time  to  a  determined  effort  to  apply  the  trunk 
line  system  to  the  carriers  in  the  Southern  States.  Reference  is 
made  here  to  the  report  submitted  in  1880  to  the  Southern  Railway 
and  Steamship  Association,  under  the  chairmanship  of  Mr.  A.  Pope, 
now  of  the  Seaboard  Air  Line  Railway.  A  committee  was  au- 
thorized to  devise  a  plan  for  the  scientific  readjustment  of  rates 
throughout  the  South.     The  following  quotation  is  significant: 

"Your  committee  entered  upon  the  performance  of  their  duty 
entertaining  the  sentiment  that  experience  and  observation  have 
rendered  generally  potent  among  those  in  charge  of  the  revenue  in- 
ter-est  of  transportation  lines,  namely,  the  necessity  for  more  intel- 
ligent and  defensible  methods  of  making  competitive  freight  rates 
than  the  following  of  figures,  descending  to  us  from  tariifs  named 
on  arbitrary  bases  or  conditions  now  obsolete,  or  by  the  assumption 
of  differences  between  centers  of  trade  now  changed  or  junction 
points  now  no  longer  such,  or  other  methods  for  which  there  are 
no  reasons  cajiable  of  satisfactory  explanation.'' 

It  is  unnecessary  to  state  in  detail  the  system  which  was  de- 
vised. Suffice  it  to  say  that  representatives  of  the  important  lines 
subscribed  to  it,  but  that  it  could  not  be  practically  applied  because 
of  the  opposition  of  other  lines,  selfishly  viewing  their  own  particu- 
lar interests  to  the  exclusion  of  all  others.  Since  this  time  no  com- 
prehensive attempt  at  readjustment  of  the  rates  has  been  made. 
Minor  changes  and  improvements  have  been  made  wherever  possi- 
ble, but,  owing  to  the  tenacity  with  which  each  of  the  carriers  ad- 
heres to  its  own  particular  policy,  no  general  improvement  has  been 
effected.  In  addition  to  the  features  peculiar  to  the  South,  which 
have  been  described  above,  there  is  also  much  complaint  respecting 
the  adjustment  of  carload  and  less  than  carload  rates  to  distributive 
centers.  These  are  identical  in  character  with  those  which  have 
been  described  elsewhere,  both  in  respect  to  the  transcontinental 
rate  situation  and  to  the  general  principles  of  carload  adjustment 
by  themselves. 

.  TRANSCONTINENTAL  RATES. 

The  attention  of  the  Interstate  Commerce  Commission  has  re- 
cently been  directed  to  the  problem  of  transcontinental  rate  adjust- 
ment. The  possible  development  of  commercial  intercourse  with 
oriental  couitries  and  the  acquisition  of  territory  by  the  United 
States  in  the  Pacific  has  rendered  these  questions  particularly  im- 
portant at  the  present  time.  Four  distinct  grounds  for  controversy 
in  this  territory  may  be  mentioned.  They  turn  primarily  upon  the 
interpretation  of  the  long  and  short  haul  clause,  and  upon  the  effect 


36 

of  special  carload  ratings  in  the  development  of  local  jobbing  in- 
terests. The  primary  factor  in  the  making  of  rates  to  the  Pacific 
coast  has  long  been  the  existence  of  competition  by  water,  either 
by  way  of  Cape  Horn  or  the  Isthmus  of  Panama.  The  facilities  for 
cheap  transportation  over  these  routes  have  compelled  the  all-rail 
lines  to  make  low  through  rates  which  would  enable  them  to  secure 
a  portion  of  the  business.  Inasmuch,  also,  as  most  of  the  competi- 
tion of  the  steamships  over  these  very  long  routes  involves  ship- 
ments in  large  quantity,  competition  with  the  railroads  has  mainly 
been  felt  in  making  rates  by  the  carload.  The  result  has  been  the 
existence  for  many  years  of  a  special  transcontinental  tariff,  more 
or  less  uniformly  adopted  by  all  the  roads,  which  consists  in  the 
main  of  commodity  rates  for  carload  shipments,  the  scale  of  these 
rates  being  sufficiently  low  to  meet  steamship  competition  as  above 
described.  It  was  never  contemplated  by  the  enactment  of  the  long 
and  short  haul  clause  to  prohibit  discrimination  at  distant  points 
when  absolutely  necessary  to  meet  water  competition.  The  Inter- 
state Commerce  Commission  recognized  the  necessity  imposed  upon 
the  transcontinental  carriers  for  making  such  concessions. 

This  simple  situation  has  been  complicated  by  the  fact  that  all 
of  the  transcontinental  lines  except  the  Southern  Pacific,  with  its 
eastern  rail  terminus  at  New  Orleans,  have  a  particular  interest  in 
building  up  both  manufacturing  and  jobbing  business  at  their  east- 
ern terminals.  Such  action  enables  them  to  secure  the  entire 
charge  for  the  transportation  of  commodities  to  the  Pacific  coast 
without  the  necessity  of  a  prorating  division,  as  when  goods  are 
hauled  from  the  Atlantic  coast.  The  situation  then  resolved  itself 
practically  into  a  competition  of  markets.  Chicago,  St.  Louis,  and 
St.  Paul  were  pitted  against  New  York,  Philadelphia,  and  other 
Atlantic  ports  in  rivalry  for  the  trade  of  the  Pacific  coast.  In  order 
to  benefit  the  cities  in  which  they  had  a  peculiar  interest,  the  all- 
rail  lines  therefore  gradually  introduced  what  is  known  as  the  sys- 
tem of  ''postage-stamp  rates."  That  is  to  say,  they  gradually  ex- 
tended to  one  city  after  another,  east  of  the  Mississippi  River,  the 
right  to  the  same  rates  to  the  Pacific  coast  as  were  enjoyed  by  the 
seaboard  cities.  As  a  consequence,  for  some  years  every  city  east 
of  the  Mississippi  has  been  able  to  ship  goods  to  San  Francisco  at 
the  same  rate  which  is  paid  from  Boston  and  New  York,  which  are 
more  than  a  thousand  miles  farther  away. 

This  system  is  justified  in  theory,  even  for  rates  from  Chicago 
and  St.  Louis,  as  due  to  water  competition;  and  it  has  been  said  that 
commodities  are  sometimes  shipped  from  as  far  inland  as  this  to  the 
Atlantic  seaboard,  and  thence  to  San  Francisco  by  water.  The 
latest  phase  of  the  controversy  reveals  the  weakness  of  this  argu- 
ment. The  inland  cities,  such  as  Chicago  and  St.  Louis,  having  been 
accorded  the  same  rate  to  San  Franicsco  as  New  York  and  Phila- 
delphia, now  demand,  and  are  pressing  their  claims  before  the 
Interstate  Commerce  Commission,  lower  rates  than  the  Atlantic 
cities  in  proportion  to  their  relative  nearness  to  San  Francisco.  In 
other  words,  they  demand  that  the  rates,  instead  of  being  made 
upon  the  "postage-stamp  basis" — absolutely    the    same    from    all 


37 

cities,  however  remote — shall  be  graded.  This  would  give  Chicago. 
St.  Louis,  and  St.  Paul  an  advantage  in  laying  down  manufactures 
or  in  distributing  products  secondarily,  in  competition  with  the 
older  centers  at  the  East.  To  this  policy  the  jobbing  interests  of 
the  Pacific  coast  strenuously  object.  From  their  point  of  view,  any 
grading  of  rates  will  enable  the  Western  cities  to  compete  with 
them  directly  in  local  distributive  business.  They  do  not  object  to 
the  low  rates  from  the  eastern  seaboard,  nor  would  it  avail  to  do  so, 
because  the  natural  conditions  of  water  competition  are  beyond  con- 
trol. Moreover,  the  low  rates  from  Atlantic  points  are  all,  as  above 
said,  on  carload  lots,  and  such  low  carload  rates  operate  distinctly 
to  the  advantage  of  the  Pacific  coast  jobber,  enabling  him  to  obtain 
goods  in  wholesale  lots,  and  then  to  break  bulk  in  order  to  distrib- 
ute them  up  and  down  the  coast. 

From  the  preceding  statement  of  conditions,  it  appears  that  the 
question  of  reasonable  adjustment  as  between  carload  and  less  than 
carload  rates  is  intimately  connected  with  that  of  the  grading  of 
rates  to  interior  centers.  Viewed  by  itself  alone  the  carload  ques- 
tion is  quite  the  same  as  that  presented  in  the  Southern  States.  It 
involves  the  rivalry  between  jobbers  in  Eastern  centers  and  jobbers 
in  the  far  West  or  South,  as  the  case  may  be.  The  jobbing  inter- 
ests in  St.  Louis,  in  particular,  are  now  instituting  proceedings  be- 
fore the  Interstate  Commerce  Commission  in  order  to  compel  a  re- 
adjustment of  the  ratings  for  large  and  sm'all  lots  in  their  interest. 
St.  Louis  desires  to  abolish  any  distinction  between  carload  and  less 
than  carload  lots  for  the  patent  purpose  of  enabling  it  to  sell  di- 
rectly throughout  Pacific  coast  territory  in  competition  with  San 
Francisco  jobbers.  The  latter,  on  the  other  hand,  demand  that  all 
less  than  carload  lot  ratings  shall  be  abolished  for  transcontinental 
shipments,  so  that  they  may  purchase  their  goods  by  the  carload 
and  resell  them  in  parcels.  The  considerations  involved  are  of  ex- 
ceeding nicety,  turning  upon  the  principles  both  of  cost  of  operation 
and  of  the  value  of  traffic.  They  have  been  discussed  in  another 
section  of  this  report. 

•  A  second  phase  of  the  transcontinental-rate  situation  is  con- 
cerned with  the  long  and  short  haul  rates  to  the  so-called  mountain 
cities,  such  as  Denver  and  Salt  Lake  City.  Rates  to  these  cities,  as 
well  as  from  these  cities  out  in  either  direction,  are  very  much 
higher  than  the  rates  for  longer  distances  through  them  and  be- 
yond. Thus,  for  instance,  in  the  case  of  Pueblo  it  has  been  shown 
that  bar  iron  was  hauled  2,400  miles,  from  Chicago  to  San  Fran- 
cisco, for  50  cents  per  100  pounds,  and  rails  were  hauled  the  same 
distance  for  60  cents;  while  for  the  haul  from  Pueblo,  Colo.,  to  San 
Francisco,  only  1,.500  miles,  the  rate  on  both  commodities  was  $1.60. 
Cotton  piece  goods  are  shipped  from  Boston  to  Omaha  for  52  cents 
per  100  pounds,  with  the  added  rate  on  to  Denver  of  |1.25,  giving  an 
aggregate  of  |1.77.  In  face  of  this,  the  rate  through  Denver  to  Cal- 
ifornia is  only  |1.  Many  other  examples  of  the  same  kind  will  be 
found  in  the  testimony  before  the  Industrial  Commission.  It  is 
urged  by  the  railroads  that  this  situation  is  inevitable,  inasmuch  as 
the  low  through  rates  are  compelled  by  water  competition.   Yet,  as 


38 

has  been  clearly  evidenced  in  the  well-known  "Kindel"  decision, 
there  seems  to  be  little  more  reason  for  according  low  rates  to 
Missouri  Eiver  points  than  to  Denver  or  Salt  Lake  City.  In  other 
words,  having  recognized  the  principle  of  postage-stamp  rates  as  far 
west  as  the  Missouri  River — according  to  every  place  as  low 
rates  to  San  Francisco  as  exist  on  the  Atlantic  seaboard — there 
seemed  to  be  no  reason  why  the  limit  should  not  be  pushed  farther 
west.  This  argument  has  been  presented  with  great  cogency  and 
force.  Largely  as  a  result  of  it,  in  the  Kiudel  decision,  the  Inter- 
state Commerce  Commission  ordered  the  carriers  to  desist  from 
such  extreme  discrimination  against  these  mountain  cities  as  was 
there  shown  to  exist.  Much  the  same  issues  are  raised  in  a  more 
recent  case,  involving  rates  to  San  Barnardino  from  Los  Angeles, 
Cal.  It  is  interesting,  in  connection  with  these  latter  cases,  to 
notice  that  the  San  Bernardino  case  has  been  pending  since  1889,  a 
decision  having  been  finally  reached  in  1901.  This  is  merely  another 
instance  of  the  intolerable  delay  incident  to  the  present  operation 
of  the  law. 

FREIGHT  CLASSIFICATION. 

Attention  has  been  directed  to  the  significance  and  importance 
of  freight  classification  of  late,  by  reason  of  the  use  made  of  it  in 
the  recent  notable  advances  of  freight  rates  throughout  the  coun- 
try. Shippers  have  awakened  to  the  fact  that  classification  is  a  fac- 
tor of  primary  importance  in  the  making  of  freight  rates.  From  a 
public  point  of  view,  the  topic  is  important  because  the  supervision 
or  control  of  classification  apparently  was  not  contemplated  by  the 
original  Act  to  regulate  commerce.  The  anomalous  situation  is  pre- 
sented, therefore,  of  a  grant  of  power  intended  to  prevent  discrim- 
ination in  freight  rates,  while  at  the  same  time  provision  for  control 
over  an  important  element  in  such  rate  making  was  entirely 
omitted. 

In  order  to  determine  what  the  freight  rate  upon  a  particular 
commodity  between  New  York  and  Chicago  is  two  separate  and 
distinct  publications  must  be  consulted.  Although  both  of  them 
usually  bear  the  name  of  a  railroad,  and  are  issued  over  its  signa- 
ture, they  emanate,  nevertheless,  from  entirely  dilTerent  sources. 
The  first  of  these  is  known  as  the  Freight  Tariff,  or  the  Rate  Sched- 
ule. It  specifies  the  rates  in  cents  per  100  pounds  for  a  number  of 
different  classes  of  freight,  numerically  designated,  between  all  the 
stations  upon  the  lines  of  the  railroad  or  its  connections.  Thus  the 
Freight  Tariff  of  the  New  York  Central  Railroad  gives  the  rates 
from  New  York  to  several  hundred  stations,  per  100  pounds,  for 
first,  second,  third,  etc.,  classes.  This  Freight  Tariff  contains  no 
mention  whatever  of  commodities  by  name,  giving  rates  merely  by 
numbered  classes.  The  second  publication,  which  must  be  con- 
sulted, supplies  this  defect.  This  is  known  as  the  Classification.  Its 
function  is  to  segregate  all  possible  commodities  which  may  be 
shipped  into  the  several  numerical  classes  already  named  in  the 
Freight  Tariff.  Thus  it  designates  dry  goods  or  boots  and  shoes  as 
first  class.   Turning  back  to  the  Freight  Tariff,  the  rate  from  New 


39 

York  to  auy  particular  place  desired,  for  such  first-class  freight,  is 
then  found  in  cents  per  100  pounds.  It  thus  appears  that  a  freight 
rate  is  compounded  of  two  distinct  elements.  One  shows  the  charge 
as  varying  for  distance,  the  other  shows  the  charge  as  determined 
by  the  character  of  the  commodity.  A  variation  in  either  one  of  the 
two  would  result,  consequently,  in  changing  the  final  rate  as  com- 
pounded. The  important  point  to  notice  is,  as  above  mentioned, 
that  fhe  sources  of  these  publications  are  entirely  distinct.  The 
Freight  Tariff  is  published  by  each  railroad  by  and  for  itself  alone. 
The  Classification,  on  the  other  hand,  is  not  peculiar  to  that  railroad, 
but  is  issued  for  it  by  a  body  known  as  the  Classification  Committee, 
which  is  composed  of  representatives  from  all  the  carriers  operating 
in  that  territory.  To  thi«  committee  is  delegated  by  the  railroads 
the  power  to  determine  what  classification  shall  be  assigned  to 
every  commodity  which  may  be  shipped  or  received  by  the  lines 
concerned.  The  railroads,  to  be  sure,  always  reserve  the  right  to 
file  exceptional  tariffs  containing  classifications  which  they  inde- 
pendently put  in  force.  These  exception  sheets,  or  commodity 
tariffs,  as  they  may  be  called,  will  be  considered  by  themselves. 

At  the  present  time,  freight  classification  for  all  the  railroads 
of  the  United  States  is  performed  by  three  committees,  known  as  the 
OflScial,  the  Southern,  and  the  Western,  with  headquarters,  respec- 
tively, in  New  York,  Atlanta,  and  Chicago.  Each  of  these  three 
committees  has  jurisdiction  over  a  particular  territory.  Thus  the 
OflScial  classification  prevails  east  of  the  Mississippi  and  north  of 
the  Ohio  and  the  Potomac  rivers,  the  Southern  over  the  remaining 
part  of  the  territory  east  of  the  Mississippi,  and  the  Western 
throughout  the  rest  of  the  country.  In  addition  to  these  there  is 
also  a  classification  issued  by  the  Transcontinental  Freight  Bureau, 
with  headquarters  at  San  Francisco.  This  bureau  has  supervision 
over  classification  upon  the  lines  engaged  in  Pacific  coast  business. 
In  a  few  States,  notably  Illinois,  Iowa,  and  certain  of  the  Southern 
States,  what  are  known  as  State  Classifications  are  in  force,  having 
relation,  however,  only  to  local  business  within  the  State.  These 
are  prescribed  by  the  State  Railroad  Commissions  and  represent 
modifications  to  suit  the  exigencies  of  localities. 

THE  QUESTION  OF  CARLOAD  RATES.    . 

One  of  the  most  troublesome  and  perplexing  questions  in  the 
adjustment  of  freight  rates  is  the  degree  to  which  reductions  should 
be  allowed  on  shipments  by  carload  as  against  shipments  in  smaller 
lots.  One  of  the  principal  grounds  of  complaint  relative  to  the  ad- 
vances of  freight  rates  of  1900  was  that  the  difference  in  the  rate 
between  carload  and  less  than  carload  lots  was  thereby  greatly 
widened.  The  question  is  a  vital  one  to  all  the  shipping  interests 
of  the  country,  and  inability  to  come  to  an  understanding  as  to 
reasonable  differences  in  rates  in  this  respect  underlies  the  primary 
diflficulty  in  the  establishment  of  a  uniform  classification  for  the 
United  States  as  a  whole.  The  justice  of  allowing  a  carload  ship- 
per lower  rates  than  one  who  ships  in  small  lots  is  apparent,  on  ac- 


40 

count  of  the  difference  in  the  cost  of  such  service  to  the  railroads. 
This  has  been  recognized  by  the  Interstate  Commerce  Commission 
and  the  courts  as  beyond  question.  Not  only  the  amount  of  paying 
freight  in  relation  to  dead  weight,  but  the  cost  of  loading  and  un 
loading,  of  billing  or  collection,  and  of  adjusting  damages — all  of 
these  elements  of  cost  are  noticeably  less  in  the  case  of  a  full  car- 
load. Turning  from  these  considerations  of  cost  to  those  prescribed 
by  what  may  be  called  traffic  principles,  the  difficulty  in  arriving  at 
a  just  determination  may  be  easily  appreciated.  Glass  battery  jars 
in  less  than  carload  lots  are  charged  from  New  York  to  Atlanta, 
Ga.,  second-class  rates,  namely,  98  cents  per  100  pounds.  The  same 
commodity  when  in  carload  shipments  (not  less  than  20,000  pounds) 
are  rated  as  fifth  class,  in  which  case  the  charge  from  New  York 
to  Atlanta  becomes  60  cents.  Here  is  a  plain  difference  of  38  cents 
a  hundred  pounds,  upward  of  60  per  cent  greater  charge  to  the 
small  shipper  whose  business  or  capital  is  insufficient  to  justify 
shipments  to  such  an  amount.  Two  results  of  this  discrimination 
are  possible.  In  the  first  place,  the  large  shipper  is  enabled  to  un- 
dersell his  smaller  competitor  and  perhaps  to  drive  him  out  of  that 
class  of  business.  This  may  happen  also  as  between  two  dealers, 
both  located  in  the  South  and  buying  their  supplies  from  New  York. 
The  second  result  is  that  under  such  rates  it  is  impossible  for  the 
manufacturer  or  Northern  jobber  to  sell  direct  from  New  York 
to  the  retailer  in  the  South  in  competition  with  the  jobber  located 
in  the  South,  who  ships  his  goods  in  at  the  cheap  carload  rate  and 
then  distributes  them  thereafter.  The  problem  thus  concerns  at 
the  same  time  both  the  small  local  shipper  or  dealer  as  against 
the  large  local  shipper  or  dealer,  and  also  the  jobber  in  New  York 
as  against  the  jobber  in  Atlanta.  In  the  latter  case,  of  course,  the 
question  is  complicated  by  the  local  rates  under  which  the  Atlanta 
jobber  must  redistribute  to  the  country  stores  the  goods  which  he 
has  already  shipped  in  on  a  low  carload  rate. 

Obviously,  in  any  representation  as  to  the  reasonableness  of 
the  difference  in  rate  which  shall  be  allowed  either  on  the  basis  of 
cost  or  of  traffic  principles,  the  interests  of  localities  are  commer- 
cially pitted  one  against  another.  To  change  the  illustration,  the 
New  York  or  Chicago  jobbing  house  desiring  to  sell  its  goods  di 
rectly  to  the  retailers  throughout  the  West  wishes  to  have  a  rela- 
tively low  rate  on  such  small  shipments  as  the  retailers  in  smaller 
places  alone  can  afford  to  purchase.  Participation  in  this  distribut- 
ing business,  however,  is  resented  by  the  jobbing  house  located  in 
Western  centers,  Omaha,  Denver,  Kansas  City,  etc.,  which  all  insist 
that  there  should  be  so  wide  a  difference  between  carload  and  less 
than  carload  rates  that  they  may  ship  in  their  wholesale  purchases 
at  a  low  rate  and  thus  compete  in  their  own  territory  with  the  man- 
ufacturer in  the  East  or  the  jobber  in  New  York  who  desires  to 
sell  direct.  Comparison  of  the  classification  in  different  parts  of 
the  country  reveals  the  influence  of  these  local  interests.  The  rail- 
roads in  Official  Classification  territory  desire,  of  course,  to  build 
up  the  manufacturing  and  jobbing  cities  tributary  to  them.  This 
can  best  be  done  by  encouraging  the  growth  of  Eastern  jobbing  cen- 
ters, stimulated  by  as  low  rates  for  retail  as  for  wholesale  ship 


41 

ments.  The  railroads  in  the  Western  and  Southern  territory,  on 
the  contrary,  are  obliged  to  consider  the  claims  of  their  constituents, 
and  so  correspondingly  minimize  the  advantages  which  foreign  com- 
petitors of  their  local  wholesale  dealers  enjoy.  Another  considera- 
tion must  also  be  kept  in  view,  namely,  that  carload  ratings  can 
only  be  accorded  when  business  has  developed  a  magnitude  suffi- 
cient to  permit  shipment  in  that  volume.  The  growth  of  the  vol- 
ume of  business  in  general,  therefore,  might  be  normally  expected 
to  produce  an  increase  in  the  proportion  of  carload  ratings.  Ex- 
perience confirms  this  view.  In  1886  the  railroads  from  the  At- 
lantic seaboard  west  made  no  distinction  as  between  carload  and 
small  lots  in  85  per  cent  of  the  articles  classified.  By  1893  how- 
ever, more  than  half,  or,  to  be  specific,  53  per  cent  of  the  articles 
enumerated  in  the  classification  were  allowed  a  lower  rate  for  the 
large  shipment.  In  Southern  territory,  on  the  other  hand,  about 
this  time  only  15  per  cent  of  the  articles  enumerated  were  accorded 
a  concession  in  rates  for  carload  shipments;  and  one  of  the  reasons 
for  this  was  undoubtedly  that  the  demand  for  shipments  of  this 
amount  of  other  commodities  had  never  made  itself  felt.  It  is  only 
very  recently,  to  take  a  specific  illustration,  that  business  has  de- 
veloped a  volume  sufiicient  to  permit  of  the  shipment  of  fly  paper 
in  carload  lots.  Until  such  time  no  discrimination  whatever  be- 
tween the  large  and  the  small  shipment  would  probably  arise.  The 
normal  development,  then,  is  toward  an  increase  in  the  number  of 
lower  rates  quoted  for  carload  lots.  This  is  retarded  only  by  the 
influence  of  the  jobbers  and  manufacturers  in  the  Eastern  trade 
centers,  who  insist  that  they  shall  be  permitted  to  compete  on  even 
terms  with  local  jobbers  by  making  their  shipments  direct  in  small 
lots  at  rates  approximately  as  low  as  the  local  jobber  pays  on  car- 
load lots.  This  question  is  an  exceedingly  important  one  requiring 
the  balance  of  opposing  interests  to  a  nicety.  Many  imomalies, 
despite  the  care  of  the  railroads,  must  undoubtedly  exist.  Thus, 
for  example,  it  is  not  clear  why  axes  should  be  accorded  a  special 
carload  rating  in  the  Official  Classiflcation,  whereas  the  freight  rate 
on  hatchets  is  the  same  whether  the  shipments  be  in  100  pounds  or 
20,000  pound  lots. 

Still  further  difficulty  arises  on  consideration  of  the  minimum 
which  shall  be  accepted  as  a  carload.  If  a  shipment  must  aggre- 
gate 20,000  pounds  or  more  in  order  to  be  entitled  to  a  low  whole- 
sale rate,  any  increase  of  this  minimum  lading  must  naturally 
operate  to  the  disadvantage  of  the  small  shipper.  It  also  still  fur- 
ther increases  the  disability  under  which  the  manufacturer  dis- 
tributes his  goods  direct  in  competition  with  the  middlemen.  At 
the  same  time  an  increase  in  the  minimum  carload  rating  must  be 
commensurate  with  the  notable  increase  in  the  capacity  of  the  roll- 
ing stock,  to  which  attention  has  recently  been  called.  Exception 
has  been  taken  in  many  quarters  to  the  action  of  the  associated  rail- 
roads in  thus  increasing  their  minimum  carload  rating  in  1900,  but 
justice  to  the  carriers  demands  that  the  question  of  cost,  as  affected 
by  the  constantly  increasing  size  of  their  cars,  must  be  considered. 
The  difficulty  is  that  every  change  of  this  kind  requires  an  entire 
recasting  and  readjustment  of  the  rates  in  order    once    more    to 


42 

equilibrate  the  conflicting  interests  involved.  Whether  questions  of 
such  nicety  may  properly  be  left  to  the  railroads  for  determination, 
without  participation  and  even  without  representation  of  any  of 
the  other  parties  concerned,  is  a  matter  demanding  serious  and  at- 
tentive consideration. 

COMMODITY  RATES. 

One  of  the  means  adopted  by  railroads  for  enabling  their  pa- 
trons to  reach  out  beyond  their  immediate  territory  and  seek  an  en- 
trance into  new  markets  is  by  the  concession  of  special  or,  as  they 
are  known,  commodity  rates.  These  form  an  entirely  distinct 
variety  of  rates  from  those  quoted  in  the  classified  tariffs.  They 
do  not  involve  inequality  between  persons,  although  they  are  spe- 
cial rates,  inasmuch  as  such  commodity  tariffs  are  publicly  filed  with 
the  Interstate  Commerce  Commission  and  are  open  to  all  producers 
at  a  given  point  of  shipment.  Such  discrimination  as  they  engen- 
der is  usually  of  a  local  rather  than  a  personal  form.  In  other 
words,  commodity  rates  may  be  granted  to  a  shipper  in  a  particular 
place  in  order  to  build  up  an  industry  at  that  point.  Such  com- 
modity rates  are  almost  invariably  granted  for  shipments  by  car- 
load lots.  This  is  especially  the  case  in  the  transcontinental  tariff', 
which  is  issued  to  meet  competition  with  a  long  sea  route.  Such 
competition  is  entirely  in  large  shipments  by  carloads.  These  rates 
are  also  found  most  commonly  in  a  territory  where  manufacturing 
is  struggling  to  gain  a  foothold,  as  in  the  Southern  States.  Thus, 
for  example,  if  it  be  shown  to  the  traffic  manager  of  a  railroad  that 
only  by  concessions  upon  the  product  of  a  new  industry  can  it  main- 
tain itself  in  competition  with  already  established  industries  else 
where,  he  may  elect  to  grant  a  commodity  rate  until  such  time  as 
the  industry  has  become  firmly  established.  Commodity  rates  ob- 
viously constitute  an  exception  to  the  regular  tariffs  and  seem  to 
be  rather  increasing  in  number. 

The  embarrassment  in  the  case  of  a  railroad  is  that,  such  a 
special  rate  once  having  been  granted,  it  becomes  exceedingly  diffi- 
cult to  withdraw  it.  One  of  the  objects  vrhich  seems  to  have  been 
contemplated  in  the  recent  advances  of  freight  rates  by  means  of 
change  in  classification  has  been  the  retirement  of  a  great  number 
of  these  special,  though  public,  commodity  rates.  It  appeared  at 
the  hearing  before  the  Interstate  Commerce  Commission  relative  to 
classification  upon  the  trunk  lines,  that  in  December  of  1899  the 
New  York  Central  had  about  1,370  of  such  special  rates.  The  adop- 
tion of  Official  Classification  No.  20  canceled  175  of  these.  Inas- 
much as  such  commodity  rates  were  upon  carloads,  the  effect  of  this 
withdrawal  was  practically  the  abolition  of  the  carload  rating  for 
the  future.  It  is  important  to  notice  that  progress  toward  uni- 
formity of  classification  throughout  the  country  seems  to  involve 
an  increase  in  commodity  rates.  Compromise  between  classifica- 
tions, once  suited  to  particular  sections  of  the  country  with  their 
local  industries,  necessitates  a  greater  number  of  exceptions  in  or- 
der to  meet  the  exigencies  of  particular  cases.  The  increase  in 
number  of  commodity  ratings  since  1887  may  be  accounted  for  by 


43 

reason  of  this  fact.  This  is  one  of  the  primary  objections  to  the 
adoption  of  a  uniform  classification  for  the  United  States.  As  one 
witness  before  the  Interstate  Commerce  Commission  testified,  ''If 
ever  there  is  a  uniform  chissification  it  will  take  a  warehouse  to 
hold  the  commodity  tariffs." 

PROGRESS  TOWARD  UNIFORMITY  OF  CLASSIFICATION. 

Present  conditions  in  the  United  States  relative  to  freight 
classification  are  far  more  satisfactory  than  they  were  before  the 
enactment  of  the  Act  to  regulate  commerce  in  1887.  The  progress 
toward  uniformity  exhibited  has  been  notable.  Conditions  preva- 
lent in  1887  were  almost  intolerable,  so  great  was  the  number  and 
the  diversity  of  the  classifications  throughout  the  country.  Some 
applied  to  local  business  only,  and  were  peculiar  to  each  road.  Some 
applied  only  to  west-bound  business,  others  to  east-bound  traffic. 
It  was  stated  by  the  traffic  manager  of  the  New  York  Central  Rail- 
road before  the  Interstate  Commerce  Commission  that  there  were 
at  one  time  138  distinct  classifications  in  the  Eastern  trunk  line 
territory.  Interest  in  the  issue  increased  to  such  a  point  that  the 
House  of  Representatives  in  1888  passed  a  resolution  authorizing 
and  directing  the  Commission  to  prescribe  a  uniform  classification 
for  all  the  roads  in  the  United  States..  This  arduous  and  perhaps 
impossible  task  was  not  apparently  desired  by  the  Interstate  Com- 
merce Commission  at  that  time,  and  personal  appeals  were  made  to 
railroad  officials  to  undertake  the  task  in  their  own  interest.  The 
outcome  was  the  appointment  of  a  standing  committee  by  a  railroad 
convention  in  December  of  1888,  instructed  as  follows: 

To  endeavor  to  combine  the  existing  classifications  in  one  gen- 
eral classification  by  the  use  of  such  number  of  classes  as  will  pre- 
vent conflicting  commodity  as  well  as  class  rates  in  the  several  sec- 
tions of  the  country  without  sacrificing  the  proper  interests  of  the 
carrier. 

The  consummation  of  this  movement  toward  unification  of 
classification,  so  devoutly  to  be  wished,  was  prevented  by  the  oppo- 
sition of  one  of  the  Eastern  trunk  lines.  Its  reasons  for  refusing  to 
accede  to  a  classification  which  had  received  the  approval  of  all  the 
railroads  of  the  country  have  never  been  made  clear.  It  appears  to 
be  due  to  the  fact  that  it  had  in  force  at  the  time  a  great  number  of 
special  or  commodity  rates,  adjusted  in  order  to  enable  manufac- 
turers along  its  line  to  reach  out  in  competition  in  distant  parts  of 
the  country.  Any  adoption  of  a  uniform  schedule  would  necessarily 
involve  concessions,  and  this  road  was  unwilling  to  concede  the 
modifications  necessary. 

The  failure  of  the  attempt  to  promulgate  a  uniform  classification 
for  the  United  States,  as  above  mentioned,  has  discouraged  all  fur- 
ther efforts  in  the  same  direction.  In  1890  a  renewed  effort  was 
made,  through  a  conference  of  railroad  representatives,  to  merge  the 
Official  and  the  Western  classifications  into  one.  This,  if  effected, 
would  have  reduced  the  number  in  force  to  two.  The  same  jealous 
regard,  however,  for  the  local  interests  of  each  territory  was  ap- 
parent, particularly  with  reference  to  the  distinctions  to  be  made 


44 

• 

between  rates  for  carload  and  less  than  carload  lots.  Special  ratings 
for  less  than  carload  lots  had  long  been  favored  by  the  Eastern 
trunk  lines,  inasmuch  as  they  enabled  manufacturers  and  jobbers  in 
the  East  to  hold  their  own  in  remote  parts  of  the  country  in  com- 
petition with  local  purchasers.  This  seems  to  have  been  the  pri- 
mary difficulty  in  preventing  the  amalgamation  of  the  Official  and 
the  Western  in  1890,  since  which  time  no  renewal  of  the  attempt 
has  been  publicly  made. 

It  should  be  noted  that  along  with  this  development  in  favor  of 
a  reduction  of  the  number  of  classifications  in  force  there  has  pro- 
ceeded an  increasing  complexity  in  the  character  of  each  of  the 
classifications  themselves.  Thus,  for  instance,  in  the  last  Classifica- 
tion .of  1886,  preceding  Official  Classification  No.  1,  there  were  only 
1,000  distinct  commodities  named.  The  first  Official  Classification, 
in  the  following  year,  had  increased  to  2,800  titles,  and  by  1893,  in 
the  eleventh  Official  Classification,  there  were  twice  that  number. 
Official  Classification  No.  21  has,  in  turn,  vastly  exceeded  even  this. 
Or,  again,  the  Western  Classification  iu  force  in  1893  contained 
3,658  items,  which  represented  an  increase  of  2,000  over  the  number 
of  commodities  classified  by  name  in  1886.  The  reason  for  this  is 
apparent.  The  development  of  traffic,  both  in  volume  and  in  com- 
plexity, necessitated  a  great  number  of  independent  decisions  as  to 
the  rate  which  should  be  accorded  specified  commodities.  In  the 
absence  of  a  general  revision  and  simplification  it  was  but  natural 
that  one  item  after  another  should  be  added,  each  bearing  a  par- 
ticular name  or  being  classified  according  to  the  mode  of  packing. 
It  is  inevitable  that  under  the  system  by  which  classification  is 
effected  such  undue  complexity  should  arise,  and  the  increasing 
number  of  articles  leads  to  inequalities  as  between  commodities  that 
are  practically  of  the  same  value.  This  appears  particularly  in 
comparison  between  different  classifications  as  described  by  the 
Interstate  Commerce  Commission.  "For  instance,  excelsior,  spring 
beds  (k.  d.),  sawdust,  and  leather  belting,  are  all  in  the  second  class 
of  the  Official  Classification  when  shipped  in  less  than  carload  lots. 
In  the  Western  only  the  belting  and  beds  are  in  the  second  class, 
excelsior  is  third,  and  sawdust  fourth;  while  in  the  Southern  beds 
are  first  class,  belting  second  class,  excelsior  fifth  class,  and  sawdust 
sixth."  It  has  been  admitted  by  those  technically  concerned,  before 
the  Industrial  Commission,  that  such  absurdities  are  very  difficult 
to  eliminate.  Their  existence,  nevertheless,  emphasizes  strongly 
the  need  for  some  tribunal  to  whom  recourse  may  be  taken  when 
the  classification  works  hardship.  Even  with  the  best  of  intentions 
on  the  part  of  the  carriers,  injustice  is  bound  to  arise.  It  may  be 
corrected  in  one  classification,  but  it  is  very  difficult  to  secure  har- 
monious action  in  the  same  direction  by  an  entirely  independent 
classification  committee  in  an  other  territory. 

PROPOSED  UNIFORM  CLASSIFICATION. 

The  Cullom  bill,  providing  for  a  general  amendment  of  the  Act 
to  Regulate  Commerce  of  1887,  contains  a  provision  requiring  the 
preparation  and  promulgation  by  the  Interstate  Commerce  Commis- 


45 

sion  of  one  uniform  classification  for  the  railroads  of  the  entire 
country.  This  revives  again  the  issue  so  prominent  in  the  years 
1889-90.  The  development,  as  has  been  suggested,  up  to  that  time, 
has  been  distinctly  toward  the  simplification  of  the  system,  but 
since  1890  no  further  advance  in  that  direction  has  taken  place.  It 
would  seem  as  if  conflicting  local  interests  had  at  last  crystallized 
into  the  three  classifications,  and  that  any  attempt  to  proceed  fur- 
ther would  meet  with  strenuous  opposition.  Undoubtedly  the  greatest 
disadvantage  incident  to  the  adoption  of  a  uniform  classification  is 
that  it  would  be  difficult  to  meet  the  local  situations  reflected  in  the 
present  classifications.  In  other  words,  the  same  commodity  may 
be  from  the  point  of  view  of  the  railroads  in  difl'erent  territories, 
able  to  bear  widely  varj'ing  proportions  of  the  total  revenue  levied 
upon  the  traffic  of  that  section.  Thus,  for  instance,  cotton  piece 
goods  are  classified  as  first  in  Western  territory,  third  in  the  Offi- 
cial, and  fifth  class  in  the  South.  The  reason  for  this  is  that  such 
cotton  piece  goods  are  in  both  the  South  and  the  East  the  product 
of  the  country — the  product  of  the  local  industry — and  it  there- 
fore becomes  the  interest  of  the  roads  to  foster  those  local  indus- 
tries by  according  a  relatively  low  freight  rate  upon  them.  On  the 
other  hand,  these  goods,  transported  into  the  West  where  no  cotton 
mills  exist  and  no  cotton  is  raised,  become  much  more  valuable  rel- 
atively to  other  products  classified.  The  number  of  illustrations  of 
this  kind  might  be  multiplied;  as,  for  example,  by  the  case  of  fruit 
from  southern  California,  which  is,  in  that  territory,  accorded  al- 
most a  commodity  rate  in  order  to  foster  the  industry.  This  same 
fruit,  reaching  New  England,  becomes  a  luxury,  and  consequently 
is  made  to  bear  a  very  much  larger  proportion  of  the  railroads'  reve- 
nue. The  East,  as  a  rule,  accords  a  low  rate  upon  all  manufactured 
products,  this  being  territory  in  which  local  stimulus  to  industries 
of  this  sort  is  required  in  the  direct  interest  of  the  carriers  them- 
selves. All  these  products,  reaching  the  Western  territory,  rise 
naturally  to  a  higher  class,  as  they  increase  in  value  to  the  commu- 
nity in  which  they  are  consumed. 

Any  unification  of  classifications  which  proceeds  upon  the 
basis  of  a  mere  compromise  can  scarcely  be  expected  to  be  satisfac- 
tory. To  return  to  our  former  example  of  cotton  piece  goods,  clas- 
sified as  first  in  the  Western  territory,  third  in  the  Official,  and  fifth 
in  the  Southern,  a  compromise  between  the  interests  of  the  three 
sections  would  seem  to  be  to  make  cotton  goods  third  class  for  the 
country  as  a  whole.  This,  obviously,  will  satisfy  neither  the  West 
nor  the  South,  because  it  will  be  too  high  to  enable  the  Southern 
mills  to  compete  as  energetically  as  the  Southern  railroads  desire 
with  the  mill^  at  the  North;  and,  on  the  other  hand,  the  classifica- 
tion will  be  too  low  in  the  West  to  yield  the  roads  the  revenue  which 
they  claim  they  must  have  from  goods  of  that  character.  The  only 
alternative,  and  one  which  it  is  predicted  will  follow  the  adoption 
of  such  a  uniform  classification,  is  the  quotation  of  special  commod- 
ity rates  wherever  the  uniform  classification  seems  to  be  at  variance 
with  local  interests.  It  is  predicted  that  the  number  of  special 
classes  of  commodity  rates  which  would  necessarily  arise  would 


46 

lead  to  far  greater  complexity  and  possible  discrimination  than  ex- 
ist at  the  present  time. 

The  Interstate  Commerce  Commission,  during  the  early  years 
of  its  life,  exercised  without  question  authority  in  matters  of  clas- 
sification. As  illustrating  this  activity,  the  case  may  be  cited  of 
the  classification  of  pearline,  which  was  a  rival,  for  cleansing  pur- 
poses, of  common  soap.  The  manufacturers  complained  that  from 
New  York  to  Atlanta,  as  classified,  the  rate  was  73  cents,  while 
common  soap  paid  a  rate  of  only  49  cents.  These  were  the  difl'erent 
rates  on  fourth  and  sixth  classes,  respectively.  After  examination, 
the  Commission  decided  that  this  discrimination  was  greater  than 
the  circumstances  warranted,  and  they  ordered  that  pearline  be 
made  fifth  class,  at  a  rate  of  60  cents.  In  Europe  such  decisions  are 
generally  rendered  by  a  tribunal  in  which  the  shippers  are  repre- 
sented. In  this  country,  it  has  been  recentl^^  held  by  the  Attorney 
General  that  the  validity  of  these  powers,  exercised  by  the  Commis- 
sion, is  doubtful.  Any  right  of  supervision  over  the  general  scheme 
of  classification  is  certainly  denied,  and  the  only  power  which  can 
be  exercised  is  that  of  dealing  with  specific  rates  as  unreasonable, 
upon  complaint. 

The  feasibility  of  a  uniform  classification,  established  under  the 
supervision  of  the  Interstate  Commerce  Commission,  has  been  dis- 
cussed by  many  witnesses  before  the  Industrial  Commission.  Most 
of  them,  however,  while  recognizing  the  great  advantage  to  flow 
from  such  uniformity,  were  inclined  to  the  view  that  the  practical 
difficulties  peculiar  to  so  large  a  country  were  insuperable.  Under 
the  railroad  and  canal  traffic  act  of  1888.  in  England,  a  simple  clas- 
sification containing  less  than  2,000  articles  was  prescribed.  The 
experience  of  that  country  can  hardly  be  held  conclusive,  however, 
because  geographical  and  industrial  circumstances  present  none  of 
the  striking  contrasts  which  exist  throughout  the  vast  territory  of 
the  United  States.  Without  recommending  arbitrarily  the  neces- 
sity for  a  uniform  classification  of  freight  in  the  United  States,  it 
seems  that  under  the  complicated  system  which  exists  at  the  pres- 
ent time  there  ought  to  be  some  public  supervision  and  control. 
There  is  absolutely  none  at  present,  as  will  be  shown  in  detail  in  a 
subsequent  chapter,  dealing  with  the  powers  of  the  Interstate  Com- 
merce Commission.  The  mere  adoption  of  a  uniform  classification, 
as  proposed  in  the  Cullom  bill,  can  accomplish  very  little,  unless 
with  this  there  be  coupled  the  proper  legislation  for  the  enlarge- 
ment of  the  powers  of  the  Interstate  Commerce  Commission  in  re- 
spect to  the  control  of  rates. 

INCREASE  OF  CAPITALIZATION. 

During  the  last  decade  railroad  capital  increased  from  |9,4.S7,- 
000,000  in  1890  to  |11,491,000,000  in  1900.  The  amount  of  capital 
per  mile  increased  from  160,340  to  |61,490  in  the  same  time.  The 
course  of  this  development  is  graphically  shown  in  part  by  the  ac- 
companying diagram.  The  figures  taken  from  the  report  on  the  Sta- 
tistics of  Railways  are  not,  however,  strictly  comparable;  for  pre- 


47 

vious  to  1896  current  liabilities  were  included  in  railway  capital, 
and  thereafter  not.  The  amount  of  stocks  and  bonds  was  |8,533,- 
000,000  in  1890,  rising  to  $10,746,000,000  in  1900.  A  comparison  of 
the  percentage  of  increase  here  with  that  of  mileage  during  the 
same  period  will  show  to  what  extent  the  addition  to  capital  may  be 
attributed  to  construction  of  new  lines.  The  total  railroad  mileage, 
it  appears,  rose  from  163,597  miles  in  1890  to  193,345  in  1900,  an  in- 
crease of  about  18  per  cent.  The  increase  of  stocks  and  bonds,  as 
shown  above,  amounted,  however,  to  over  25  per  cent.  Capital  has 
increased,  therefore,  considerably  faster  than  mileage.  This  shows 
that  a  large  part  of  the  new  capital  is  to  be  explained  as  coming 
from  reorganizations  of  railroad  properties,  by  which  additional 
securities  have  been  issued  without  withdrawing  proportionate 
amounts  of  old  stock. 

For  two  years  of  the  last  decade — 1891  and  1900,  respectively — 
the  increase  of  capitalization  has  been  especially  noteworthy.  In 
the  former  year  |397,000,000,  representing  |2,446  per  mile  of  line, 
were  added  to  railroad  capital.  This  remarkable  increase,  it  should 
be  observed,  took  place  at  a  time  when  there  was  no  marked  activity 
in  railway  construction.  The  statistician  of  the  Interstate  Com- 
merce Commission  in  his  report  for  1892  commented  upon  its  sig- 
nificance as  follows: 

It  was  found  that  a  larger  proportion  of  the  increase  was  due  to 
reorganization  and  to  the  issue  of  securities  for  the  purpose  of  in- 
vestments in  the  stocks  of  subsidijiiy  lines.  Quite  a  number  of  cases 
were  discovered,  however,  which  could  not  be  explained  in  harmony 
with  sound  financial  principles  from  any  data  presented  in  the  re- 
ports. It  is  believed  that  a  close  investigation  would  bring  to  light 
a  looseness  of  method  not  in  harmony  with  public  interest. 

In  the  year  1900  there  was  an  increase  of  $457,000,000  in  rail- 
road capital.  Of  this  amount  not  over  |120,000,000  can  be  assigned 
to  new  construction,  as  only  4,051  miles  of  new  line  were  built  dur- 
ing the  year.  This  leaves  $337,000,000  to  be  explained  in  other  ways. 
OflBcial  statistics  report  the  increase  of  capitalization  for  1900  over 
the  preceding  year  to  amount  to  $1,147  per  mile  of  line.  The  in- 
crease which  set  in  so  heavily  last  year  still  continues.  Among  new 
issues  of  securities  made  or  contemplated,  the  Riiilwav  World  of 
^larch  23,  1901,  mentions  the  following:  Pennsvlvania*,  $100,000,000; 
Union  Pacific,  $40,000,000;  Erie  (coal  bonds),  $32,000,000;  Reading, 
$23,000,000;  Great  Northern,  $20,000,000;  Baltimore  and  Ohio,  $15,- 
000,000:  Burlington,  $9,900,000;  St.  Paul,  $8,800,000.  The  total  is- 
sues for  the  first  half  of  the  year  throughout  the  country  probably 
exceeded  $300,000,000.  For  a  parallel  to  this  recent  expansion  of 
securities  it  would  be  necessary  to  go  back  to  the  great  inflation  of 
the  early  eighties,  when  in  five  years— 1879  to  1884— $3,360,000,000 
of  new  railroad  securities  were  listed.  The  recent  enlargement  of 
railroad  capital  has  taken  place  almost  entirely  through  reorganiza- 
tion and  consolidation  of  existing  roads.  It  is  pertinent  to  inquire, 
as  we  have  done  in  a  later  part  of  this  report,  whether  the  great  in- 
crease of  capitalization  which  has  taken  place  is  likely  to  entail  an 
additional  burden  on  rates,  in  order  to  pay  interest  and  dividends 


48 

on  new  securities.  This  policy  exposes  the  companies  to  the  temp- 
tation to  put  up  rates  undul}',  and  at  the  same  time  renders  such 
action  more  easily  possible  since  it  eliminates  competition,  the  only 
check  upon  the  rates, 

STOCKS  VERSUS  BONDS. 

The  proportion  of  stocks  in  the  railroad  capital  of  the  country 
has  increased  markedly  during  the  last  decade.  In  1890  the  amount 
of  stock  was  less  than  that  of  the  funded  debt,  being  only  46.73  per 
cent  of  the  total  capitalization  (including  at  this  time  floating  debt), 
while  bonds  equalled  48.47  per  cent.  In  1900  the  stock  exceeded  the 
funded  debt,  having  increased  to  50.87  per  cent  of  the  total  capitali- 
zation (exlcuding  floating  debt),  bonds  being  49.13  per  cent. 

The  first  railroads  in  the  United  States  were  built  on  stock.  All 
the  bonds  that  were  issued  were  debentures,  as  is  still  the  practice 
in  England.  In  1855  the  total  amount  of  stock  issued  up  to  that 
date  exceeded  that  of  bonds  by  42  per  cent.  This  condition  existed 
everyw^here  throughout  the  country  except  in  the  West,  where  the 
bonds  were  in  excess.  The  proportion,  however,  was  reversed  dur- 
ing the  decade  from  1855  to  1865,  when  speculation  was  rampant 
and  railroads  were  extended  rapidly  with  little  regard  to  economy 
of  construction.  Building  upon  bond  issues  prevtiiled.  Then  came 
the  panic  of  1873,  with  the  result  that  nearly  |500,000,000  of  bonds 
were  defaulted.  Bonds  continued  to  preponderate  until  after  the 
reorganizations  of  railroad  property  in  the  years  1893  to  1897,  which 
aimed  to  reduce  fixed  charges  by  substituting  stocks  for  bonds. 
Fifty-seven  companies,  reorganized  during  this  period,  effected  a 
reduction  of  fixed  charges  to  the  amount  of  $19,600,000.  Thus, 
Atchison  in  1895  cut  its  fixed  charges  by  |4,185,000;  Northern  Pa- 
cific in  1896  by  |4,755,000.  Prior  to  1895  the  annual  increase  in  rail- 
road capital  had  shown  usually  a  large  preponderance  of  bonds. 
During  1895  a  change  took  place,  stocks  increasing  during  that  year 
$127,000,000  and  funded  debt  only  $28,000,000.  For  the  year  1896 
stocks  increased  $265,000,000,  while  funded  debt  actually  decreased 
$45,000,000.  The  next  year,  for  the  first  time  in  the  railroad  history 
of  the  United  States,  the  amount  of  stock  outstanding  exceeded  that 
of  the  entire  funded  debt.  For  the  year  1900  the  increase  in  stock 
was  more  than  two  and  a  half  times  as  great  as  the  increase  ia 
funded  debt;  but,  as  the  statistician  of  the  Interstate  Commerce 
Commission  remarks,  this  can  hardly  be  interpreted  as  a  healthful 
tendency,  since  the  increase  in  indebtedness  alone  exceeded  the 
probable  cost  of  railroad  construction  during  the  year. 

The  policy  of  railroad  management  of  late  years  has  been,  in 
general,  to  secure  new  capital  by  issuing  additional  stock  instead  of 
increasing  funded  indebtedness.  Recent  stock  issues  by  the  Great 
Northern,  the  Pennsylvania,  the  Burlington  and  the  St.  Paul,  fur- 
nish illustrations.  Debenture  bonds  have  been  issued  by  the  Union 
Pacific  and  the  Baltimore  and  Ohio  which  are  convertible  into  com- 
mon stock.  Very  recently,  however,  some  roads  have  substituted 
bonds  for  stocks  at  exceedingly  high  valuations  as  compared  with 


49 

previous  standards.  According  to  estimates  made  by  the  Commer- 
cial and  Financial  Chronicle,  |367,000,000  of  stocks  have  been  with- 
drawn recently  and  replaced  by  |559,000,000  of  bonds.  On  an  aver- 
age more  than  $150  in  bonds  has  been  substituted  for  |100  in  stock. 
This  substitution  not  only  increases  railroad  capitalization  at  the 
rate  of  over  50  per  cent  but  necessitates  payment  of  interest  on  the 
bonds  issued,  if  the  companies  are  to  keep  out  of  the  hands  of  re- 
ceivers. 

NATURE  AND  METHODS  OF  STOCK  WATERING. 

Stock  watering  may  be  defined — without  regard  to  the  question 
of  the  justifiability  or  culpability  of  the  practice — as  the  issuing  of 
securities  that  do  not  represent  money  invested  in  the  property. 
''Water"  includes  all  that  is  put  into  the  property  except  actual 
money.  The  object  of  making  such  fictitious  additions  to  capital 
stock  may  be  either  to  secure  an  initial  profit  by  selling  new  stock 
to  investors,  or  to  conceal  the  regular  profits  of  an  undertaking  by 
reducing  the  nominal  rate  of  dividend.  The  latter  motive  is  more 
frequent.  When  a  road  is  doing  a  profitable  and  expanding  business 
and  paying  large  and  growing  dividends,  its  stock  rises  on  the 
market,  the  advance  registering  the  increasing  value  of  the  prop- 
erty. Under  such  circumstances  the  company  may,  by  issuing  addi- 
tional stock,  keep  down  the  rate  of  dividend,  prevent  the  price  of 
the  stock  from  going  up  excessively,  and  thus  cover  up  the  true  ex- 
tent of  the  road's  profits.  To  illustrate,  a  company  with  a  capital 
stock  of  15,000.000,  paying  a  12  per  cent  dividend  may,  by  doubling 
the  stock,  reduce  the  dividend  to  6  per  cent  and  continue  distribu- 
ting to  the  stockholders  the  same  amount  of  net  revenue  as  for- 
merly. 

Opinions  differ  as  to  the  general  expediency  and  justifiability 
of  the  latter  course.  The  weight  of  opinion,  however,  is  against  the 
policy.  Mr.  T.  L.  Greene,  a  recognized  authority  on  corporation 
finance,  testified  before  the  Industrial  Commission  that  "It  is  a  great 
deal  better  for  a  road  to  pay  high  dividends  than  it  is  for  it  to  water 
its  stock,"  for  the  reason  that  if  dividends  are  increased  they  can 
later  be  reduced  in  bad  times,  while  if  the  capitalization  is  enlarged, 
and  only  a  4  per  cent  dividend  rate  paid,  a  later  reduction  will 
cause  trouble.  The  main  objection  to  the  practice  of  stock  watering 
is  that  it  tends  to  raise  or  keep  up  passenger  and  freight  rates.  It 
furnishes  also  an  argument  against  the  demands  of  labor  for  higher 
wages.  The  permanent  burden  of  the  heavier  capitalization  makes 
it  less  likely  that  the  public  will  be  given  the  benefit  of  reduced 
charges  as  the  business  develops.  This  question  of  the  relation  of 
capitalization  to  rates  will  be  considered  later. 

Methods  of  inflating  capitalization  are  various.  Formerly  sheer 
fraud  was  often  practiced  in  issuing  stock  for  speculative  purposes. 
Between  1868  and  1872,  for  example,  the  share  capital  of  the  Erie 
Road  was  increased  from  117,000,000  to  |78,000,000  for  the  purpose 
of  manipulating  the  market.  This  action  led  the  Board  of  the  New 
York  Stock  Exchange  in  1869  to  refuse  to  quote  the  Erie  shares. 

4a 


50 

Another  fraudulent  device  consisted  in  paying  excessive  sums  to 
dummj-  construction  companies,  composed  of  members  of  the  rail- 
road company  and  their  friends.  For  instance,  the  original  South- 
ern Pacific  road  cost  actually  only  10,000,000;  although  it  is  a  matter 
of  record  that  |15,000,000  was  paid  a  construction  company,  and 
the  bankers'  syndicate,  which  financed  the  road,  received  |40,000,000 
in  securities,  or  an  average  of  16  in  bonds  and  stock  for  each  dollar 
of  actual  cost.  The  same  thing  happened  in  connection  with  other 
Pacific  roads.  It  was  also  not  uncommon  for  directors  of  railroad 
companies  to  purchase  other  railroad  properties  and  then  sell  them 
to  their  own  company  at  excessive  prices.  Again,  stock  has  in  many 
instances  been  given  away  by  railroad  companies  simply  as  a  bonus 
to  bait  purchasers  of  the  bonds  which  the  concerns  were  trying  to 
float.  It  is  well  known  that  the  New  York  Central,  Erie,  Reading, 
St.  Paul,  Chicago  and  Northwestern,  gave  away  in  this  manner  a 
portion  of  their  earlier  stock  issues.  These  flagrant  methods  of 
stock  watering  have  been  largely  discontinued  during  recent  years. 
The  principal  methods  of  stock  watering  still  employed  are  the 
following: 

1.  The  commonest  is  the  payment  of  so-called  stock  dividends 
to  shareholders.  "These  consist  either  of  an  outright  bonus  of  new 
shares  of  stocks  or  bonds,  or  in  a  mitigated  form,  of  stocks  sold  be- 
low par  or  at  less  than  market  quotations."  Examples  are  the  80 
per  cent  stock  dividend  of  the  New  York  Central,  in  1868;  the 
Reading  scrip  dividends  between  the  years  1871  and  1876;  the  Chi- 
cago, Burlington  and  Quincy  and  Atchison  stock  dividends  of  20 
per  cent  and  50  per  cent,  respectively,  in  1880  and  1881;  and  the 
famous  Boston  and  Albany  distribution  of  State  stock  in  1882. 

2.  Consolidation  of  railroad  properties  offers  opportunities  to 
increase  capital  surreptitiously  in  various  ways,  (a)  One  is  through 
the  issue  of  new  stock  to  defray  the  entire  expenses  of  betterment  of 
the  operating  plant.  (6)  Sometimes,  again, the  constituent  companies 
are  gerrymandered  so  that  the  successful  concerns  with  surplus 
earnings  are  combined  with  roads  less  favorably  situated,  thus  mak- 
ing it  possible  to  distribute  earnings  at  a  comparatively  low  divided 
rate,  (c)  The  third  device  connected  with  consolidation  consists  in 
substituting  a  high-grade  for  a  low-grade  security.  A  weak  com- 
pany, whose  stock  is  quoted,  say.  at  50,  may  be  merged  in  a.  second 
corporation  whose  stock  stands  at  100.  The  latter  may  then  issue 
new  stock  worth  .f  100  in  exchange  for  the  $50  stock,  share  for  share. 

3.  A  third  method  is  the  substitution  of  stock  issues  for  fund- 
ed debt.  It  has  the  advantage  of  giving  great  elaciticity  to  future 
dividend  possibilities.  The  substitution  of  8  per  cent  stock  for  4  per 
cent  bond  facilitates  the  absorption  of  increasing  earnings  in  the 
future.  The  stocks  also  permit  of  cessation  of  dividends  during 
periods  of  depression.  The  substitution  of  stock  for  bonds  in  this 
way  is  not,  however,  so  harmful  to  the  public  interest,  provided  the 
stock  issues  are  subject  to  control  by  State  commissions. 

4.  Another  expedient  for  increasing  capitalization  is  the  fund- 
ing of  contingent  liabilities.  Large  amounts  of  such  liabilities,  in 
the  form  of  bills  payable,  wages  and  salaries  due,  and  the  like,  may 


51 

be  covered  by  issues  of  interest-bearing  scrip.  This  is  unquestion- 
ably bad  financiering,  as  floating  debts  should,  in  general,  be  pro- 
vided for  out  of  earnings. 

An  excellent  illustration  of  inflation  of  capitalization  is  fur- 
nished by  the  recent  reorganization  of  the  Chicago  and  Alton  Rail- 
way Company.  The  old  Alton  management  was  extremely  conser- 
vative. The  stock  had  never  been  watered,  and  represented,  before 
the  recent  deal,  less  than  the  probable  cost  of  duplication.  The 
company  was  capitalized  at  about  |30,()00,000,  including  |22,000,000 
of  stock  and  about  18,000,000  of  bonds.  It  had  a  net  earning  ca- 
pacity of  $2,900,000  a  year,  paying  regular  dividends  of  7  or  8  per 
cent  on  its  common  stock.  In  1899  the  road  was  bought  by  a  syn- 
dicate, which  paid  |175  a  share  for  the  common  stock  and  |2o6  a 
share  for  the  preferred  stock,  making  a  total  cost  to  the  purchaser 
of  140,000,000  for  the  |22,000,000  of  stock.  The  road  was  recapi- 
talized at  194,000,000,  or  |54,000,000  of  bonds  and  $40,000,000  of 
stock.  The  new  bonds  were  floated  at  3:^  per  cent.  The  fixed  charges 
of  the  road  as  reorganized  amount  to  |1, 903,000  per  year.  On  the 
basis  of  the  former  earning  capacity  of  the  road,  which  averaged 
considerably  more  than  |3,000  net  per  mile,  it  is  estimated  that  the 
company  will  have  no  dilBculty  in  earning  its  fixed  charges  and 
paying  a  dividend  on  the  preferred  stock.  The  increase  of  capitali- 
zation in  this  case  is  defended  on  the  ground  that  the  road  will  not 
have  to  earn  any  more  than  formerly  in  order  to  pay  interest  and 
dividends  on  the  new  capital.  It  seems  clear,  however,  that  the 
doubling  of  the  capital  stock  an(J  the  increasing  of  the  bonded  debt 
nearly  sevenfold  must  impose  a  burden  upon  the  rates  that  will  tend 
to  prevent  any  reduction  which  might  otherwise  naturally  take 
place,  and  afford  a  convenient  reason  for  refusing  to  advance  wages. 

This  subject  of  stoek  watering  leads  naturally  to  the  discussion 
of  the  proper  basis  of  railroad  capitalization,  which  will  be  con- 
sidered next. 

BASIS  OF  CAPITALIZATION. 

The  popular  theory  on  this  subject  is  that  capitalization  should 
be  based  on  the  original  cost  of  the  property  or  the  actual  invest- 
ment of  capital  in  the  enterprise.  The  stocks  and  bonds  should  rep- 
resent money  paid  in.  It  is  contended  that  investors  are  entitled  to 
fair  returns  upon  this  amount,  but  to  nothing  more.  Opposed  to  this 
theory  held  by  the  public  is  another,  advocated  hj  most  of  the  rep- 
resentatives of  corporate  enterprise,  that  the  proper  basis  of  capi- 
talization is  earning  power,  regardless  of  the  amount  of  capital  in- 
vested. Thus,  for  example,  if  a  company  is  earning  $50,000  per 
year  it  may,  according  to  this  second  theory,  properly  be  capitalized 
at  11,000.000,  assuming  a  5  per  cent  rate  of  profits  as  a  basis. 

The  proposition  that  capital  be  limited  to  the  real  investment 
seems,  on  first  examination,  to  be  a  fair  one,  but  further  reflection 
will  show  that  there  are  certain  objections  to  such  a  rule.  In  some 
cases  the  actual  amount  invested  in  the  enterprise  would  give  too 
high  and  in  other  cases  too  low  a  capitalization.   This  basis  would 


52 

give  too  high  a  capitalization  in  cases  where  the  original  cost,  on 
account  of  high  price  of  labor,  high  rate  of  interest,  incompetence 
of  management,  or  other  causes,  had  been  much  greater  than  would 
be  the  present  cost  of  building  the  road.  Another  factor  has  been 
cogently  stated  in  a  recent  case — 

"The  State  can  not  permit  the  capitalization  of  dishonesty,  ex 
travagance,  or  incompetence,  nor  can  it  permit  the  burden  of  obso- 
lete industrial  processes  or  administration  to  be  laid  on  future 
generations." 

It  is  unquestionable  that  in  the  case  of  many  Western  roads 
capital  was  recklessly  squandered  in  the  process  of  construction. 
The  basis  of  original  cost  would  give  too  low  a  capitalization  in  the 
case  of  roads  which  have  been  compelled,  in  the  interest  of  unity 
and  efficiency  of  service,  to  make  heavy  expenditures  for  the  pur- 
chase of  competing  or  contributing  systems.  It  may  be  remarked 
in  this  connection  that  the  common  tendency  is  undoubtedly  to 
underestimate  the  cost  of  railroad  construction.  The  average  cost 
has  sometimes  been  asserted  to  be  only  about  $10,000  a  mile.  Again, 
it  is  frequently  said  that  all  the  railroad  capital  of  the  country  in 
excess  of  |30,000  per  mile  represents  water.  This,  however,  is  cer- 
tainly not  true.  The  cost  of  construction  of  a  trunk  line,  with  a 
thorough  equipment,  may  average  more  than  $50,000  a  mile.  In 
the  majority  of  cases  the  original  cost  would  furnish  too  narrow  a 
basis  for  capitalization.  Thus  in  the  case  of  the  Illinois  Central,  the 
appreciation  in  value  of  its  land  grants  represented  in  part  the  en- 
terprise of  its  original  promoters,  as  well  as  the  risks  which  they  in- 
curred in  building  the  road.  It  is  in  the  interest  of  the  public,  as 
well  as  the  railroads,  that  the  latter  should  secure  some  returns 
from  new  economies  in  management;  otherwise  there  would  be  no 
stimulus  to  saving.  The  public  has  no  legitimate  claim  to  all  gains 
resulting  from  economy  in  the  refunding  of  indebtedness  and  in  the 
operation  of  the  roads.  It  seems  not  unreasonable  that  skillful 
management  should  be  capitalized  to  some  extent. 

EARNING  CAPACITY. 

The  jjreference  of  railroad  financiers  for  earning  capacity  as  a 
basis  of  railroad  capitalization  is  easily  understood.  Capitalization 
on  this  basis  enables  a  road  to  conceal  the  extent  of  its  profits  and 
to  absorb  increasing  revenue  without  incurring  public  displeasure 
and  arousing  agitation  for  lower  rates.  Furthermore,  a  company 
that  is  highly  capitalized  can  usually  be  sold  to  better  advantage 
than  one  with  a  low  capitalization.  As  has  been  observed,  people 
seem  to  like  to  deal  in  large  figures,  and  the  average  investor  pre- 
fers to  buy  200  shares  of  stock  quoted  at  50  and  paying,  say  3  per 
cent,  than  100  shares  of  stock  quoted  at  par  and  paying  6  per  cent. 
A  large  capitalization,  therefore,  is  thought  to  confer  some  ad- 
vantage for  purposes  of  sale. 

There  are  two  legitimate  arguments  which  may  be  advanced  in 
favor  of  capitalization  on  the  basis  of  earning  capacity.  One  is 
that— 


53 

"in  no  other  way  can  the  risks  incident  to  the  novel  enterprise,  re 
pelling  timid  capital,  be  overweighted  by  possible  profits  through 
premiums  in  the  form  of  securities  purchasable  at  discount." 

This  argument  does  not  hold,  however,  in  the  case  of  railroad 
undertakings  that  involve  no  real  initial  risk;  and  it  is  probably 
true  that  the  element  of  risk  in  most  railroad  enterprises  projected 
in  recent  years  is  very  inconsiderable.  The  second  argument  is  more 
weighty.  It  is  contended  that  a  quick  capital,  in  the  form  of  credit 
or  cash,  is  needed  for  the  profitable  operation  of  any  plant.  As 
stated — 

"Without  such  working  capital  the  plant,  not  being  a  "going" 
concern,  loses  much  of  its  value.  Consequently,  it  is  urged,  capital 
in  excess  of  the  value  of  the  plant  may  rightfully  be  created  for  this 
purpose  by  the  sale  of  stocks  or  bonds." 

The  force  of  this  argument  is  considerably  qualified  by  the  con- 
sideration that  a  railroad  corporation  possesses  a  valuable  fran- 
chise, attachable  for  debt,  which  seems  to  give  sufficient  security  to 
enable  it  to  obtain  working  capital  by  the  ordinary  means. 

The  chief  objection  to  capitalization  on  the  basis  of  earning 
capacity  is  that  it  obscures  the  relation  between  rates,  wages,  and 
profits.  It  is  impossible  to  discover,  without  a  careful  appraisal  of 
the  property,  whether  an  overcapitalized  road  is  earning  more  than 
a  fair  return  upon  the  investment.  The  principle  is  generally  ac- 
cepted at  the  present  time  that  capital  is  not  entitled  to  more' than 
a  certain  fair  rate  of  profits.  The  issuance  of  additional  securities 
on  the  basis  of  increasing  earning  power  makes  it  possible  for  a 
company  covertly  to  secure  exorbitant  returns  on  the  actual  invest- 
ment. This  objetcion  seems  conclusive  against  the  policy  of  full 
capitalization  up  to  the  limit  of  earning  power. 

COST  OF  REPRODUCTION. 

Neither  original  cost  nor  earning  power,  then,  furnishes  an  en- 
tirely satisfactory  basis  of  capitalization.  As  a  substitute,  cost  of 
reproduction  has  been  suggested,  and  in  some  cases  applied.  By 
this  is  meant  simply  the  actual  cost  of  laying  down  the  roads  at 
the  present  time,  including  proper  allow^ance  for  value  of  terminals 
and  right  of  way.  Whether  the  present  capitalization  of  American 
railroads  is  in  excess  of  the  probable  cost  of  reproduction  is  dis- 
puted. By  some  it  is  asserted  that  railroad  capital  is  much  greater 
than  the  cost  of  constructing  the  roads  at  the  present  time.  By 
others  it  is  declared  to  be  actually  less. 

Cost  of  duplication  is  observed  as  the  rule  for  determining  fair 
capitalization  by  the  Massachusetts  Board  of  Railroad  Commission- 
ers. The  principle  has  also  been  laid  down  by  the  courts  in  certain 
cases,  notably  in  the  Minnesota  case  of  the  Great  Northern  Railway 
Company,  1896.  The  question  involved  in  this  case  was  the  reason- 
ableness of  the  rates  for  some  lines  of  the  Great  Northern  system 
as  fixed  by  the  State  Railroad  and  Warehouse  Commission.  The 
company  appealed  to  the  district  court,  which  thereupon  reversed 
the  order  of  the  commission.    Appeal  was  taken  from  this  decision 


54 

to  the  State  supreme  court,  and  the  case  was  ordered  back  for  a 
new  trial.  The  opinion  of  the  court  is  valuable  for  the  clear  defini- 
tion which  it  gives  of  the  proper  basis  for  the  determination  of 
rates,  and  hence  of  capitalization.  The  facts  of  this  case  were, 
briefly,  as  follows:  The  lines  of  the  Great  Northern  Railway  in  ques- 
tion were  owned  by  other  roads  until  1879.  In  that  year  they  were 
sold  to  the  St.  Paul  and  Manitoba  Company  at  foreclosure  for 
|3,G00,000,  which  was  far  below^  the  real  value.  The  new  company 
operated  the  lines  until  1890,  increasing  the  stock  to  |20,000,000  and 
the  bonds  to  |84,558,484.  In  1890  all  the  lines  of  this  company  were 
leasecj  to  the  Great  Northern  Company,  the  latter  guaranteeing  pay- 
ment of  the  principal  and  interest  of  the  bonds  and  6  per  cent  on  the 
stock.  In  contesting  the  rates  prescribed  by  the  State  commission, 
counsel  for  the  Great  Northern  argued  that  the  amount  of  the 
present  fixed  charges  of  the  company  should  determine  what  was 
a  reasonable  revenue  to  be  derived  from  operating  leased  lines.  The 
Attorney-General  contended  in  opposition  that  the  price  at  which 
the  properties  had  been  sold  at  foreclosure  should  be  taken  as  the 
basis  for  fixing  rates.    The  court  held: 

"In  our  opinion  both  positions  are  wholly  untenable.  If  the  Man- 
itoba Company  and  its  promoters  bought  the  properties  at  fore- 
closure, as  well  as  at  a  great  sacrifice,  that  is  their  good  fortune;  if 
the  lease  of  the  system  by  the  Great  Northern  Railway  Company 
turns  out  ot  be  a  bad  bargain,  that  is  its  misfortune.  The  patrons 
of  the  road  should  not  gain  by  one  transaction  or  lose  by  the  other. 
There  is  as  much  reason  why  the  public  should  bear  the  loss  of  the 
had  bargain  as  there  is  why  it  should  take  the  profits  of  the  good 
bargain.  To  adopt  any  such  principle  would  leave  the  public  at  the 
mercy  of  every  railroad  manipulator  and  offer  a  premium  on  all 
kinds  of  schemes  for  increasing  fixed  charges  of  railroads.  Again, 
in  determining  what  are  reasonable  rates,  it  is  perfectly  immaterial 
whether  the  railroad  is  mortgaged  for  two  or  three  times  what  it 
would  cost  to  reproduce  it,  or  whether  it  is  free  from  incumbrances. 
To  hold  otherwise  would  be  to  hold  that  the  State  or  the  public  have 
indirectly  guaranteed  the  payment  of  the  mortgage  bonds  of  every 
railroad." 

The  question  of  rates,  in  the  opinion  of  the  court,  was  to  be 
determined  "by  ascertaining  what,  under  all  the  circumstances,  is 
a  reasonable  income  on  the  cost  of  reproducing  the  road  at  the  pres- 
ent time."  The  court  instituted  an  inquiry  to  determine  this,  and 
decided  that  .f  14,000,000  would  reproduce  the  terminals  and  ,^30,000,- 
000  the  rest  of  the  road.  A  lower  rate  of  interest  was  allowed  to 
the  amount  representing  the  cost  of  reproducing  the  terminals  than 
to  the  rest  of  the  property,  on  the  ground  that  the  terminal  property 
was  likely  to  go  on  increasing  greatly  in  value.  It  was  held,  finally, 
that  the  income  of  the  road,  with  the  rates  as  reduced  by  the  com- 
mission, would  produce  2|  per  cent  net  income  on  the  cost  of  repro- 
ducing the  terminals  and  5  per  cent  net  income  on  the  cost  of  re- 
producing the  rest  of  the  road,  and  that  under  the  circumstances 
this  was  a  fairly  liberal  return.  The  order  of  the  lower  court  was 
therefore  reversed. 


55 

It  is  interesting  to  contrast  with  this  Minnesota  case  the  Texas 
Eaih'oad  Commission  case  decided  by  the  United  States  Supreme 
Court  in  1898.  This  decision  annulled  certain  rates  which  had  been 
fixed  for  the  Houston  and  Texas  Central  by  the  Texas  Railroad 
Commission,  on  the  basis  of  estimated  cost  of  reproduction  of  the 
road.  The  court  ruled  that  the  commission  had  underestimated  the 
value  of  the  property,  having  made  no  allowance  for  its  favorable 
location,  and  that 

'.'in  view  of  the  advance  of  prosperity  in  the  country  through  which 
it  runs,  and  the  increment  to  its  value  due  to  the  settling,  seasoning, 
and  permanent  establishment  of  the  railways,  and  to  the  established 
business  and  good  will  connected  with  its  business,  which  has  been 
established  through  a  long  series  of  years,  all  of  which  ought  reason- 
ably to  be  considered  in  fixing  the  value  of  the  property  and  the 
capitalization  upon  which  it  is  entitled  to  earn  and  should  pay  some 
returns  by  way  of  interest  and  dividends." 

According  to  this  decision  the  cost  of  reproduction,  strictly  de- 
fined, is  inadequate  as  a  basis  of  railroad  capitalization.  It  fails  to 
take  account  of  certain  elements  which  should  be  considered  in  esti- 
mating the  real  value  of  railroad  property  and  the  amount  of  return 
to  which  it  is  fairly  entitled. 

COMBINATION  OF  FACTORS  IN  CAPITALIZATION. 

It  would  seem  that  a  fair  basis  of  capitalization  is  to  be  found 
only  by  taking  into  consideration  both  cost  of  reproduction  and 
earning  capacity.  The  United  States  Supreme  Court,  in  the  case  of 
Smythe  v.  Ames,  has  decided  that  the  following  items  should  be 
considered  in  estimating  the  value  of  railroad  property  The  origi- 
nal cost  of  construction,  the  amount  expended  in  permanent  im- 
provements, the  amount  and  market  value  of  its  bonds  and  stock 
the  present  as  compared  with  the  original  cost  of  construction,  the 
probable  earning  capacity  of  the  property  under  particular  rates 
prescribed  by  statute,  and  the  sum  required  to  meet  operating  ex- 
penses. The  Nebraska  Maximum  Freight  Rate  Case  also  bears  di- 
rectly upon  this  issue. 

A  valuation  of  railroad  property,  with  regard  to  both  cost  of 
reproduction  and  earning  capacity,  was  undertaken  recently  by  the 
Board  of  Tax  Commissioners  of  Michigan.  The  commission  under- 
took, first,  to  appraise  the  physical  properties  of  the  roads,  and,  sec- 
ond, to  appraise  what  might  be  termed  the  nonphysical  elements  in 
their  value.  In  appraising  the  physical  properties  the  cost  of  repro- 
duction was  taken  as  a  basis.  This  was  determined  by  a  thorough 
survey  of  the  roads,  made  by  experts.  The  nonphysical  elements  of 
railroad  property,  which  constitute  what  is  usually  called  the  fran- 
chise value  of  railway  corporations,  were  valued  according  to  a 
plan  devised  by  Prof.  Henry  C.  Adams.  This  value  was  determined 
(1)  by  deducing  aggregate  expenses  of  operation  from  gross  earn- 
ings and  adding  the  income  from  corporate  investments;  (2)  by  de- 
ducting from  the  total  income  thus  obtained  an  amount  properly 
chargeable  to  capital — that  is,  a  certain  per  cent  on  the  appraised 


56 

value  of  the  physical  properties — rents  paid  for  the  lease  of  prop- 
erty operated  and  permanent  improvements  charged  directly  to  in- 
come; (3)  by  capitalizing  the  remainder  at  a  certain  rate  of  interest. 
Exceptions  from  this  procedure  were  made  in  the  case  of  particular 
roads  peculiarly  situated.  This  method  of  valuation  would  seem  to 
give  the  true  basis  of  capitalization,  which  would  then  represent 
both  the  cost  of  reproducing  the  property  and  the  franchise  value 
arising  from  surplus  earning  capacity.  Such  a  valuation  of  railroad 
property  is  useful  for  purposes  of  both  taxation  and  of  rate  making. 
It  is  to  be  noted  that  the  Michigan  plan  allows  a  higher  rate  of  re- 
turn on  the  nonphj^sical  property  than  on  the  physical  property* 
The  commission  fixed  the  annuity  on  the  former  at  6  per  cent  after 
deducting  1  per  cent  for  taxes,  and  on  the  latter  at  4  per  cent.  It 
seems  desirable  that  a  similar  valuation  of  railroad  property  should 
be  undertaken  in  other  States;  although  Michigan  itself  has  not  as 
yet  acted  upon  the  recommendations  of  the  Commission. 

CAPITALIZATION  AND  RATES. 

The  relation  of  capitalization  to  rates  is  a  much-debated  ques- 
tion. Opinions  differ  as  to  whether  overcapitalization  results  in  an 
increase  of  freight  and  passenger  charges.  Hon.  Martin  A.  Knapp, 
Chairman  of  the  Interstate  Commerce  Commission,  testified  before 
the  Industrial  Commission  that  he  had  not  seen  an  instance  in  which 
rates  seemed  much  to  depend  upon  or  be  influenced  by  the  capitali- 
zation of  the  road.  Capitalization,  be  held,  cuts  no  figure  in  the  rate 
question.  He  admitted,  however,  that  when  the  reasonableness  of 
a  particular  rate  was  called  into  question,  capitalization  had  to  be 
considered  in  determining  what  the  road  in  question  ought  to 
charge.  In  deciding  upon  the  reasonableness  or  unreasonableness 
of  a  road's  charges  the  Interstate  Commerce  Commission  takes  into 
consideration  its  financial  condition.  If  a  road  is  embarrassed  with 
fixed  charges  of  a  large  amount,  a  rate  may  be  justifiable  which 
would  be  altogether  unreasonable  in  the  case  of  a  road  with  only 
slight  incumbrances  of  indebtedness. 

Mr.  T,  L.  Woodlock,  a  witness  before  the  Industrial  Commis- 
sion, also  maintains  that  rates  are  not  affected  by  overcapitalization. 
Capitalization,  he  declares,  has  no  bearing  whatever  on  rates  or 
earnings.  It  is  a  resultant  of  forces,  and  not  a  force  itself.  Simi 
larly,  Mr.  H.  T.  Newcomb,  then  chief  of  the  Division  of  Statistics  of 
the  United  States  Department  of  Agriculture,  is  of  the  opinion  that 
stock  watering  has  no  material  bearing  on  rates.  In  support  of  this 
opinion  the  general  fact  of  the  heavy  decline  in  railroad  rates  since 
1870  is  cited.  Mention  is  also  made  of  particular  roads  which  have 
increased  their  capitalization  and  at  the  same  time  reduced  rates. 
The  New  York  Central  has  increased  its  capitalization  since  1892 
from  $202,000  to  |348,000  per  mile,  yet  rates  have  steadily  declined. 
On  the  other  hand,  the  Southern  Pacific  has  a  remarkably  low  capi- 
talization of  only  118,000  per  mile,  yet  its  rates  are  so  high  as  to 
arouse  public  antagonism. 

It  may  be  conceded  upon  this  point  that  fixed  charges  and 
dividends  do  not  directly  affect  rates.     The  main  consideration  in 


57 

the  adjustment  of  railroad  charges  is  the  development  of  traffic. 
The  cost  of  service  enters  in  only  so  far  as  the  actual  expense  of 
hauling  goods  constitutes  a  minimum  below  which  rates  are  not 
reduced.  Above  the  minimum,  rates  are  determined  by  the  possibil- 
ity of  developing  traffic.  "Thus,"  observes  President  Hadley  in  his 
Kailroad  Transportation,  "there  has  gradually  grown  up  a  system 
of  rates  favoring  certain  classes  of  goods,  certain  localities,  or  cer- 
tain individuals.  It  was  found  that  by  lowering  rates  for  cheap 
goods  a  large  traffic  was  developed.  It  was  found  that  by  lowering 
the  rates  at  competitive  points  large  traffic  might  be  secured  which 
would  otherwise  come  by  other  routes.  It  was  found — at  any  rate 
it  appeared — that  by  lowering  rates  to  certain  individuals  a  road 
increased  its  returns  better  than  by  a  general  lowering  of  rates. 
This  constitutes  the  system  of  charging  'what  the  traffic  will  bear.'  " 
The  reason  why  fixed  charges  are  practically  ignored  in  arranging 
rates  is  that  these  go  on  substantially  unaltered,  whether  the 
amount  of  traffic  is  small  or  large.  If  a  road  rejects  traffic  that  can 
not  be  made  to  pay  an  amount  necessary  to  cover  its  full  percentage 
of  fixed  charges,  it  gains  nothing  in  reduction  of  these  charges  and 
loses  a  certain  amount  of  revenue.  It  pays  a  road  to  take  traffic  at 
anything  above  the  mere  cost  of  hauling  the  goods — that  is,  the 
amount  of  operating  expenses  that  would  be  saved  if  the  traffic  were 
not  taken.  Acceptance  of  traffic  even  at  rates  only  slightly  above 
the  actual  cost  of  hauling  the  goods  brings  in  something  toward  the 
payment  of  fixed  charges.  This  consideration  is  the  basis  of  the  con- 
tention that  capitalization  has  no  direct  influence  upon  rate  making. 
But  indirectly  capital  does  have  some  connection  with  rates. 
In  the  long  run  excessive  capitalization  tends  to  keep  rates  high; 
conservative  capitalization  tends  to  make  rates  low.  Rates,  as  we 
have  seen,  are  governed  by  'Svhat  the  traffic  will  bear."  An  import- 
ant element  in  determining  what  the  traffic  will  bear  is  the  pressure 
of  competition,  where  this  exists.  Two  kinds  of  competition  are  to 
be  distinguished  here,  which  have  been  termed,  respectively,  direct 
and  indirect  competition.  Direct  competition  is  that  between  lines 
covering  the  same  territory  or  connecting  the  same  terminals;  in- 
direct competition  takes  place  between  roads  having  no  territory  in 
common  but  serving  producers  who  are  competing  for  the  supply 
of  the  same  markets.  ^'Strictly  speaking,"  as  pointed  out  by  Dr. 
Weyl  in  a  recent  paper  on  the  subject,  '^permanent  competition  can 
exist  not  between  railroads  struggling  for  the  same  traffic,  but 
solely  between  those  railroads  which  have  no  territory  in  common. 
Given  two  railroads  which  tap  a  given  circumscribed  wheat  area 
in  Dakota,  and  however  bitter  and  fierce  the  struggle  for  patronage 
may  temporarily  be,  the  inevitable  result  is  the  adoption  of  a  modus 
Vivendi  which  places  rates  upon  a  permanent  basis.  But  Dakota 
w^heat  enjoys  no  monopoly,  and  the  freight  rates  on  these  roads 
must  be  low  enough  to  allow  the  Dakota  farmer  to  compete  with  the 
farmers  of  Nebraska  and  Kansas.  In  consequence  the  freight 
charges  on  Kansas  and  Nebraska  roads  will  determine  a  maximum 
above  which  the  Dakota  railroads  can  not  permanently  charge.  The 
same  fact  is  true  of  foreign  competition.     Our  wheat  roads  must 


58 

compete  not  only  with  those  in  Canada,  but  with  Indian,  Russian, 
and  Argentine  railroads,  as  well  as  with  enormous  maritime  agen- 
cies all  over  the  world."  This  sort  of  indirect  competition  in  the  dis- 
tribution of  products  puts  a  certain  check  upon  rates,  even  where 
direct  comjjetition  is  entirely  absent.  Where  competition  of  either 
kind  exists,  rates  are  not  dominated  by  the  amount  of  capitalization. 
But  competition  in  either  form  is  not  always  present.  Where  it  is 
absent,  overcapitalization  with  high  fixed  charges  and  dividend  re- 
quirements may  lead  to  the  raising  of  rates  above  the  amount  that 
would  give  reasonable  returns  upon  the  actual  investment. 

High  capitalization  tends,  moreover,  to  keep  up  rates  by  pre- 
venting voluntary  concessions  which  might  otherwise  have  taken 
place.  A  company  paying  high  dividends  may  find  it  expedient  to 
lower  its  rates  in  order  that  the  appearance  of  exorbitant  profits 
may  not  excite  a  hostile  public  opinion.  But  if  returns  from  exces- 
sive rates  can  be  distributed  in  dividends  on  watered  capital,  the 
public  is  not  aroused  to  demand  reductions.  High  capitalization, 
therefore,  has  at  least  an  indirect  bearing  on  rates.  The  amount  of 
railroad  capital  is  not  to  be  regarded  as  a  matter  of  no  concern  to 
shippers. 

POSITION  AND  POWERS  OF  THE  INTERSTATE  COMMERCE 

COMMISSION. 

A  great  change  in  the  status  and  powers  of  the  Interstate  Com- 
merce Commission  has  taken  place  since  its  institution  in  1887. 
The  law  under  vrhich  it  was  organized  has  been  only  slightly 
amended,  but  the  decisions  of  judicial  tribunals  have  greatly  modi- 
fied, and  in  general  reduced,  the  powers  and  functions  which  the 
Commission  was  at  first  supposed  to  possess.  At  the  outset  two 
policies  were  open.  One  was  to  make  the  Commission  a  body  whose 
primary  function  should  be  to  detect  violations  of  the  law  in  mat- 
ters of  rate  cutting,  discrimination,  and  the  like;  the  other  was  to 
develop  its  functions  in  the  way  of  investigation,  in  order  to  dis- 
cover the  broader  and  more  fundamental  principles  upon  which 
equitable  rate  adjustment  should  be  based.  In  pursuit  of  the  first 
aim  the  Commission  would  naturally  hear  complaints  from  indi- 
viduals and  institute  proceedings  thereunder.  Viewed  in  this  way, 
it  would  partake  rather  of  a  detective  or  inquisitorial  character. 
From  the  second  point  of  view,  the  duty  of  the  Commission  would  be 
rather  to  institute  proceedings  on  its  own  account,  not  for  the  pro- 
tection of  individuals,  but  rather  for  its  own  information  and  acting 
upon  its  own  initiative.  In  the  main  it  has  been  contended  to  follow 
the  first  line  of  action,  viz,  to  act  only  upon  specific  complaint  from 
shippers  or  parties  in  interest.  It  has  not,  however,  entirely  re- 
frained from  inaugurating  investigations  on  its  own  account,  such 
as,  for  instance,  in  the  well-known  hearings  in  1896  respecting  rail- 
road rates  to  Missouri  River  points  and  also  those  respecting  the  in- 
creases in  classification  of  1900.  Its  policy  has  in  the  main  been  to 
act  only  upon  complaint. 


59 


PROCEDURE  BEFORE  THE  COMMISSION. 

In  order  to  understand  the  situation,  it  ma;v  be  necessary  at  the 
outset  to  describe  the  exact  procedure  in  the  majority  of  cases.  For- 
mal complaint  having  been  filed  with  the  Commission  alleging  vio- 
lation of  some  section  of  the  Act  to  regulate  commerce,  the  Commis- 
sion summons  witnesses,  and  by  the  examination  of  papers  arrives 
at  a  decision,  which  it  promulgates  as  an  order  to  the  carriers.  This 
order  recites  that  the  action  in  question  is  or  is  not  in  violation  of 
the  act;  and  in  the  former  event  generally  prescribes  the  necessary 
remedy.  The  situation  at  present  is  this,  namely,  that  such  orders 
are  entirely  disregarded  by  the  carriers,  who  refuse  to  recognize 
their  force  and  validity.  The  Commission  in  such  a  case  appeals  to 
the  United  States  courts  for  an  injunction  compelling  obedience  to 
the  order.  In  response  to  this  appeal  the  courts  proceed  to  review 
the  entire  case,  and  upon  the  findings  issue  an  order  which,  after 
being  upheld  by  the  Supreme  Court,  in  case  appeal  is  taken,  be- 
comes binding  upon  the  railroads.  Then,  and  only  then,  is  the  act^ 
rendered  effective. 

This  situation  has  caused  the  following  results  which  are  of 
primary  importance:  First,  intolerable  delay  in  the  redress  of  griev- 
ances; second,  the  postponement  of  all  definite  proceedings  until 
the  case  has  been  opened  before  the  courts;  and  third,  the  denial  in 
many  cases  of  any  eft'ective  remedy  whatever  for  loss  to  the  ship- 
pers incurred.    These  may  be  considered  somewhat  in  detail. 

DELAY  IN  DECISIONS— APPEALS  TO  COURTS. 

The  first  and  constant  complaint  from  shippers  and  others  who 
seek  redress  by  proceedings  before  the  Interstate  Commerce  Com- 
mission is  that  years  may  elapse  before  any  final  decision  is  or  can 
be  rendered.  The  average  duration  of  cases  before  the  Commission 
is  stated  to  be  not  less  than  four  years,  and  this  may  in  many  in- 
stances extend  to  twice  that  length  of  time.  The  delay  seems  to  pro- 
ceed from  a  variety  of  causes.  In  the  first  place  the  Commission 
itself  is  often  slow  to  arrive  at  a  decision.  A  striking  instance  of 
this  is  ofl'ered  in  the  case  of  proceedings  instituted  before  it  by  the 
representatives  of  commercial  interests  of  the  city  of  Charleston. 
More  than  two  years  have  already  elapsed,  and  the  primary  order  of 
the  Commission  has  not  yet  been  promulgated.  Secondly,  a  large 
proportion  of  the  cases  of  any  impoi-tance  are  carried  to  the  United 
States  Circuit  Court  of  Appeals,  and  finally  to  the  United  States 
Supreme  Court.  Great  delay  in  such  cases  results  because  no  pri- 
ority whatever  is  accorded  to  these  cases,  which  must  take  their 
regular  course  on  the  already  crowded  dockets.  More  important 
than  all  of  these  reasons  for  delay,  however,  is  the  fact  that  the 
courts  have  as  a  rule  refused  to  accept  the  testimony  taken  before 
the  Commission  in  the  original  proceedings  as  final.  This  necessi- 
tates the  resummoning  of  all  the  witnesses  previously  examined 
and  the  production  de  novo  of  all  the  papers  necessary  to  a  judicial 
finding.     This  latter  action  of  the  courts  seems  to  be  based  upon 


60 

the  decision  in  the  Kentucky  and  Indiana  Bridge  case,  in  which  it 
was  held  that  the  court  must  consider  a  case  referred  to  it  for  en- 
forcement as  though  it  were  original.  The  court,  in  other  words, 
refused  to  consider  the  Commission's  investigation  as  final  even  in 
respect  to  matters  of  fact.  Another  feature  of  this  situation  is  even 
more  unfortunate.  Inasmuch  as  the  final  decision  in  any  important 
case  can  not  be  rendered  until  the  courts  have  passed  upon  the  case, 
and  since  the  courts  will  not  accept  the  findings  or  evidence  before 
the  Commission  as  final,  it  has  become  more  and  more  common  for 
the  carriers  to  refuse  to  open  their  cases  in  full  before  the  Com- 
mission at  all.  They  do  not  present  their  arguments  in  full,  nor  do 
they  summon  their  important  witnesses,  merely  regarding  the  pro- 
ceedings before  the  Commission  as  a  necessary  formality  to  be  ob- 
served prior  to  the  conclusive  adjudication  of  the  case  by  the  courts. 
The  Commission  thus  is  compelled  to  issue  its  orders  not  upon  a  full 
and  complete  hearing  of  the  case,  and  is  obliged,  moreover,  to  have 
its  findings  reviewed  by  the  courts  upon  the  basis  of  entirely  new 
considerations.  This  tends,  of  course,  to  discredit  the  Commission, 
both  in  the  eyes  of  the  public  and  of  the  shippers,  who  do  not  re- 
alize that  the  cases  passed  upon  originally  by  the  commission  and 
later,  on  appeal,  by  the  courts,  may  be  and  often  are  essentially  dif- 
ferent. The  Supreme  Court,  in  its  decision  in  the  Social  Circle  and 
other  recent  leading  cases,  has  strongly  condemned  this  state  of 
affairs. 

After  the  review  of  the  case  by  the  courts,  which  usually  cov- 
ers the  more  technical  points  of  law,  it  may  become  necessary  for 
the  entire  question  to  be  remanded  to  the  Commission  for  a  new 
decision  in  conformity  with  the  findings  of  the  court.  Thus,  for  ex- 
ample, in  the  so-called  Chattanooga  Board  of  Trade  cases,  which 
were  originally  instituted  before  the  Commission  in  1892,  a  deci- 
sion was  rendered  on  appeal  by  the  United  States  Supreme  Court 
only  in  the  present  year,  1901,  after  a  lapse  of  nine  years.  The  Su- 
preme Court  has  just  returned  the  case  to  the  Commission,  with  an 
order  that  its  decision  be  based  upon  consideration  of  other  com- 
mercial conditions,  which  it  w^as  not  able  to  consider  in  its  original 
decision.  Supposing  that  after  the  necessary  delay  the  Commission 
again  issues  an  order,  there  seems  to  be  no  guaranty  that  the  case 
shall  be  concluded  even  at  that  time.  If  it  involves  any  money  pay- 
ment, of  course  it  necessitates  a  trial  before  a  circuit  court;  and  new 
phases  are  always  being  presented  which  may  allow  the  same  case 
to  be  again  appealed  wnth  the  same  intolerable  delay.  The  entire 
history  of  proceedings  before  the  Interstate  Commerce  Commission 
is  one  of  delay  and  inefficiency  in  the  equitable  settlement  of  griev- 
ances by  reason  of  the  facts  above  enumerated. 

LACK  OF  EFFECTIVE  REMEDY. 

Nor  is  there  any  guaranty  that,  even  after  the  protracted  de- 
lays incident  to  the  method  of  procedure  before  the  Commission  and 
the  courts  above  described,  any  effective  remedy  ultimately  will  be 
provided.    As  an  instance,  the  well-known  cases  of  the  Cincinnati 


61 

and  Chicago  Freight  Bureaus  may  be  cited.  These  were  pendijig 
before  the  Commission  and  the  courts  for  a  number  of  years,  and 
the  railroads  still  refuse  to  acquiesce  in  the  decision  as  rendered. 
Even  supposing  that  the  carriers  obey  the  order  of  the  Commission, 
that  does  not  necessarily  provide  any  remedy  for  financial  or  other 
loss  entailed.  The  orders  of  the  Commission  become  effective,  in 
theory,  only  when  they  have  been  passed  upon  finally  by  the  United 
States  Supreme  Court.  During  all  the  years  which  may  elapse  the 
loss  entailed  upon  the  plaintiff  may  continue,  and  losses  hundreds 
of  times  as  great  may  ensue  for  others.  And,  even  more  important 
than  this,  it  may  be  impossible  that  the  parties  who  really  are  ag- 
grieved can  ever  obtain  redress.  This  point  has  been  brought  out 
clearly  in  the  various  reports  of  the  Commission.  Thus,  for  ex- 
ample, the  only  party  who  can  recover  for  the  excess  in  freight 
rates  paid  to  the  carrier  is  the  person  who  has  actually  made  the 
payment.  It  goes  without  saying  that  in  many  instances  the  real 
burden  of  the  unreasonable  freight  rate  does  not  rest  upon  this 
party  at  all,  but  upon  others  who  are  denied  action  by  reason  of  the 
machinery  of  the  law.  Thus,  for  instance,  if  an  unreasonable  rate 
be  charged  upon  grain  from  a  certain  locality,  it  is  indubitable  that 
the  effect  of  that  excessive  freight  rate  is  to  depress  unduly  the 
price  of  the  product.  The  farmer,  however,  can  not  institute  pro- 
ceedings before  the  Commission.  It  is  only  the  middlemen  who 
happen  to  be  shippers  who  may  do  so,  and  the  shippers  may  recoup 
themselves  readily,  having  no  incentive,  therefore,  to  institute  pro- 
ceedings at  all.  The  result  is  that  the  loss  in  any  instance  ulti- 
mately falls  upon  the  producer  of  grain,  without  the  possibility  of 
an  adequate  remedy  for  the  injustice  entailed. 

REMEDIES  IN  PROCEDURE  SUGGESTED. 

What  are  the  remedies  proposed  for  the  defects  in  procedure 
which  have  been  above  described,  and  which  are  responsible  for 
much  of  the  dissatisfaction  with  the  interstate-commerce  act  as  it 
stands?  Many  of  these  were  included  in  the  act  reported  to  the 
Senate  by  the  Committee  on  Interstate  and  Foreign  Commerce  in 
1894.  They  are  substantially  the  same  as  those  included  in  the  so- 
called  "Cullom  bill,"  which  was  introduced  in  the  last  Congress. 
Stripped  of  all  legal  verbiage  these  amendments  simply  provide,  in 
the  first  place,  that  the  burden  of  appeal  to  the'  courts  from  orders 
or  findings  of  the  Commission  shall  rest  upon  the  carriers  rather 
than  upon  the  Commission  itself.  In  other  words,  the  Commission 
having  promulgated  its  order,  the  same  shall  become  effective  and 
binding  unless  the  carriers  shall  bring  suit  in  a  United  States  court 
within  thirty  days  to  compel  a  review  of  the  case.  This,  it  is  al- 
leged, will  operate  to  give  finality  to  the  larger  proportion  of  the 
proceedings  of  the  Commission,  making  them  effective  at  once. 
Coupled  with  this  provision  is  another  which  is  intended  to  obviate 
the  protracted  delay  in  case  an  appeal  is  taken.  Such  amendment 
provides,  in  the  first  place,  that  cases  of  this  character  shall  take 
precedence  on  the  docket  of  the  United  States  courts  over  private 


62 

causes;  and  secondly,  that  the  evidence,  pleadings,  papers,  and  ex- 
hibits taken  before  the  Commission  and  certified  to  by  its  secretary 
shall  be  filed  with  the  court  and  received  in  evidence.  The  court 
may  render  its  decision  upon  the  basis  of  this  evidence  if  it  please, 
or  it  may  require  that  the  Commission  secure  additional  testimony. 
In  any  event,  however,  such  testimony  or  papers  submitted  by  the 
Commission  shall  be  regarded  as  competent.  Inasmuch  as  the 
volume  of  such  testimony  if  often  great — in  the  recent 
San  Bernardino  case  for  instance  tilling  ten  large  volumes  of  type 
script — this  must  result  in  a  great  economy  both  of  time  and  of  ex- 
pense. To  this  amendment  the  railroads  in  1897  seemed  not  disin- 
clined to  consent.  Other  advantages  than  mere  economy  are  inci- 
dental to  this  plan.  It  necessitates  that  the  courts  shall  pass  upon 
precisely  the  same  question  which  was  presented  to  the  Commis- 
sion. This  will  protect  the  Commission  against  the  appearance  of 
incomi)]ete,  biased,  or  ill-considered  judgments  or  orders.  Further 
than  tliis,  to  insure  that  the  parties  who  actually  bear  the  burden 
of  an  unreasonable  freight  rate  or  rate  adjustment  shall  secure  ade- 
quate redress,  requires  amendment  of  the  act  in  other  important 
details.  Since,  however,  these  do  not  involve  mere  procedure,  but 
rather  the  essence  of  the  act  itself,  they  will  be  considered  in  an- 
other connection. 

POWERS  OF  THE  COMMISSION  RESPECTING  TESTIMONY  AND 
THE  PRODUCTION  OF  PAPERS. 

In  one  respect  only  have  the  powers  of  the  Interstate  Commerce 
Commission  been  adequately  fortified  by  amendment.  This  is  in 
respect  to  its  power  to  compel  the  attendance  and  testimony  of  wit- 
nesses as  well  as  the  production  of  papers.  One  of  the  primary 
questions  passed  upon  by  the  courts  was  as  to  the  powers  of  an  ad- 
ministrative body  like  the  Interstate  Commerce  Commission  in  this 
respect.  The  enforcement  of  the  provisions  of  the  act,  specially  in 
matters  relating  to  personal  discrimination,  the  payment  of  rebates, 
etc.,  necessitated  the  vindication  of  these  rights  of  the  Commission 
at  the  outset.  For,  in  the  first  place,  it  has  been  held  by  the  courts 
that  corporations  can  be  made  amenable  to  the  law  only  through 
the  instrumentality  of  persons  in  their  employ;  and,  secondly,  the 
detection  of  guilt  in  such  matters  can  only  be  secured  by  testimony 
of  persons  who  have  directly  witnessesd  or  participated  in  the  acts 
themselves.  For  twenty-five  j^ears  a  section  (8G0)  of  the  Revised 
Statutes  of  the  United  States  has  required  witnesses  to  testify  in 
court,  even  if  such  testimony  might  be  used  against  them  in  crim- 
inal proceedings.  All  that  the  statute  did  was  to  protect  the  wit- 
ness against  such  proceedings,  but  not  against  giving  the  testimony 
itself.  In  1892  the  validity  of  this  statute  was  passed  upon  in  a 
leading  case,  wherein  it  was  held  that  this  statute  was  unconstitu- 
tional, being  in  violation  of  the  Fifth  Amendment  to  the  Constitu- 
tion of  the  United  States,  which  provides  that  ''No  person  shall  be 
compelled  in  any  criminal  case  to  be  a  witness  against  himself.'' 
This  decision  in  the    well-known    Counselman    case    very    greatly 


(T 


63 

hampered  the  the  Interstate  Commerce  Commission  in  securing  evi- 
dence. Similar  in  tenor  was  a  case  also  decided  in  1892  in  the 
United  States  Circuit  Court  at  Chicago,  known,  as  the  Brimson 
case.  Informal  complaint  had  been  made  by  shippers  that  the  Illi- 
nois Steel  Company  was  deriving  illegal  advantage  over  other  ship- 
pers through  the  ownership  and  control  of  five  so-called  "switchin 
roads."  It  was  alleged  that  by  means  of  the  ownership  of  these 
short  connections  the  Illionis  Steel  Company  was  obtaining  unduly 
low  through  joint  rates.  In  order  to  establish  this  fact  it  became 
necessary  to  ascertain  whether  the  ownership  of  the  switching  roads 
was  vested  in  the  Illinois  Steel  Company  or  not.  Several  witnesses 
refused  to  testify,  and  the  powers  of  the  circuit  court  were  invoked 
by  the  Interstate  Commerce  Commission  in  order  to  compel  them 
to  testify.  The  court  held  that  the  Commission  was  a  nonjudicial 
body,  and  that  the  process  of  the  courts  could  not  be  exercised  in 
aid  of  an  investigation  before  such  a  tribunal,  inasmuch  as  this 
would  involve  a  subordination  of  the  judicial  department  of  the 
Government  to  the  executive  branch. 

The  result  of  these  two  decisions  in  the  Counselman  and  Brim- 
son  cases  was  that  it  became  practically  impossible  for  the  Commis- 
sion to  institute  any  proceedings  whatever.  An  appeal  was  made  to 
Congress,  and,  as  a  result,  an  act  was  passed  in  1893  which  pro- 
vided as  follows: 

"That  no  person  shall  be  excused  from  attending  and  testifying 
*  *  *  in  any  case  or  proceeding  *  *  *  based  upon  or  grow- 
ing out  of  any  alleged  violation  of  the  act  of  Congress  entitled  an 
Act  to  Regulate  Commerce  *  *  *  on  the  ground  or  for  the 
reason  that  the  testimony  or  evidence,  documentary  or  otherwise, 
required  of  him  may  tend  to  criminate  him  or  subject  him  to  a  pen- 
alty or  forfeiture.  But  no  person  shall  be  prosecuted,  etc.,  *  *  * 
for  or  on  account  of  any  transaction,  matter  or  thing  concerning 
which  he  may  testify  or  produce  evidence,  documentary  or  other- 
wise." 

The  year  1891  witnessed  a  decision  by  the  Supreme  Court  over- 
ruling the  Brimson  case  above  mentioned  and  once  more  upholding 
the  Commission  in  invoking  the  process  of  the  courts  to  compel  tes- 
timony. In  the  same  year  while  the  special  act  of  1893  was  in  effect, 
a  witness  was  subpoenaed  to  give  testimony  in  the  same  case  under 
the  act.  He  refused  to  testify  on  the  plea  that  his  testimony  would 
tend  to  criminate  him.  The  grand  jury  reported  him  to  the  court, 
but  he  was  discharged,  it  being  alleged  that  the  act  of  1893  required 
testimony  which  would  tend  to  criminate  him,  and  that  the  act 
was  therefore  unconstitutional.  A  decision  of  the  Supreme  Court 
on  this  issue  could  not  be  secured  at  that  time.  Meanwhile,  during 
all  these  years  from  the  time  of  the  original  Counselman  decision, 
the  hands  of  the  Commission  were  practically  tied,  in  any  endeavor 
to  secure  facts  upon  which  to  base  any  attempts  to  secure  indict- 
ments under  the  criminal  provisions  of  the  original  act. 

The  controversy  respecting  the  powers  of  the  Commission  was 
not  finally  settled  until  1896,  at  which  time  in  the  so-called  Brown 
case  the  act  of  1893  was  held  constitutional,  although  by  a  bare  ma- 


64 

jority  of  the  Supreme  Court.  This  changed  very  materially  the  re- 
lations between  the  Interstate  Commerce  Commission  and  railroad 
oflScials  and  shippers  who  conspired  to  evade  the  law.  At  last,  after 
almost  five  years,  the  right  of  the  Commission  in  this  respect  was 
vindicated.  The  Brown  case  arose  in  1895  under  an  indictment 
charging  certain  oflScials  of  the  Allegheny  Railroad  Company  with 
violating  the  interstate-commerce  law.  Mr.  Brown,  the  auditor  of 
this  company,  declined  to  answer  certain  questions  as  to  freight 
rates  charged  and  rebates  given.  The  circuit  court  in  this  instance 
held  that  there  was  no  apparent  intention  in  the  act  of  1893  to  shield 
witnesses  from  any  humiliation  or  disgrace  which  might  follow  the 
confession  of  a  criminal  act,  even  although  that  law  expressly  ex- 
empted them  from  prosecution  under  it.  Moreover,  this  decision 
held  that  no  infamy  or  disgrace  would  attach  to  a  witness,  be- 
cause by  the  act  of  testifying  he  had  under  the  law  wiped  out  the 
crime.  Practically,  therefore,  the  legislative  act  of  1893  provided  a 
greater  safeguard  than  even  the  Fifth  Amendment  to  the  Consti- 
tution. Under  this  decision  of  the  circuit  court,  upheld  by  the  Su- 
preme Court  in  1896,  little  difficulty  has  been  experienced  by  the 
Commission  in  securing  attendance  of  witnesses  or  production  of 
such  papers  as  may  be  necessary.  In  respect  to  this  single  detail 
of  the  law  the  effectiveness  of  the  act  seems  to  have  been  thorough- 
ly secured. 

It  is  interesting  to  note  in  this  connection  that  the  vindication 
of  the  right  of  the  Commission  to  compel  testimony  changed  con- 
siderably the  attitude  of  the  Commission  relative  to  the  penalties 
which  should  be  provided  by  the  statute  respecting  secret  rebates 
and  discrimination.  It  had  for  some  years  been  maintained  by  the 
Commission  that  the  imprisonment  clause  of  the  act  was  too  severe; 
and  that  a  large  part  of  the  difficulty  in  securing  evidence  resulted 
from  the  unwillingness  of  witnesses  to  testify  to  facts  which  might 
lead  to  the  imprisonment  of  associates  or  others.  It  was  held  that, 
if  the  stringency  of  this  provision  were  mitigated  to  a  mere  money 
penalty,  the  unwillingness  of  witnesses  to  testify  would  be  lessened. 
Having,  however,  under  the  Brown  decision  above  namied,  secured 
power  to  compel  attendance  and  testimony  of  witnesses,  regardless 
of  the  fact  as  to  whether  such  testimony  would  entail  emprisonment 
for  shippers  or  fellow-servants,  the  Commission  has  once  more 
urged  that  the  imprisonment  clauses  of  the  act  be  maintained  in 
all  their  former  stringency. 

DECISIONS  OF  COURTS  RESTRICTING  POWER. 

Within  two  months  after  the  establishment  of  the  Interstate 
Commerce  Commission  it  began  to  interpret  the  law  as  giving  it, 
not  only  power  to  investigate  matters  of  freight  rates,  but  also  to 
prescribe  and  enforce  the  remedy  for  existing  evils.  The  exercise 
of  rate-making  power,  however,  was  directed  entirely  to  the  correc- 
tion of  such  abuses  as  came  before  it  on  complaint.  The  Commis- 
sion distinctly  refrained  from  claiming  the  right  to  prescribe  the 
rate  in  the  first  instance,  as  is  shown  by  its  decision  in  the  Dela- 


65 

ware  and  Hudson  Canal  Company  case.  This  limitation  upon  its 
right  to  prescribe  rates,  fully  recognized  by  itself,  is  clearly  shown 
in  its  statement  in  the  Cincinnati  and  Chicago  Freight  Bureau  de- 
cision as  follows: 

"Thia  Commission  is  not  primarily  a  rate-making  body.  The 
carrier  is  left  free  to  arrange  its  own  tariffs  in  the  first  instance. 
We  sit  for  the  correction  of  what  is  unreasonable  and  unjust  in 
those  tariffs." 

No  question  either  on  the  part  of  the  carriers,  of  the  Commission, 
or  the  courts  was  raised  as  to  the  validity  of  this  action  within  the 
limits  named. 

It  was  not  until  almost  ten  years  after  the  institution  of  the 
Commission,  in  fact,  that  its  right  in  this  respect  was  contested. 
The  first  shadow  of  doubt  seems  to  have  been  expressed  in  the  deci- 
sion of  the  Supreme  Court  in  the  so-called  "Social  Circle"  case  ad- 
judged in  189G.  This  case  involved  the  reasonableness  of  rates  from 
Cincinnati  to  the  town  of  Social  Circle,  Ga.,  as  related  to  the  rates 
to  Atlanta  and  Augusta  on  either  side.  Disregarding  other  phases 
of  the  case  which  concerned  the  interpretation  of  the  long  and  short 
haul  clause,  the  Commission  had,  when  the  case  was  first  decided  in 
1889,  ordered  a  reduction  of  the  rate  from  Cincinnati  to  Atlanta 
from  |1.09  to  |1  per  100  pounds.  This  case  was  carried  to  the  Su- 
preme Court,  where  decision  was  finally  rendered  in  1896.  Purely 
as  an  obiter  dictum  the  court  discussed  briefly  the  interpretation  of 
the  original  act  in  respect  to  this  rate-making  power.  It  expressed 
a  reasonable  doubt  in  the  premises,  even  going  further  and  confess- 
ing inability  to  find  any  provision  of  the  act  "that  expressly  or  by 
necessary  implication  confers  such  power."  It  does  not  seem  clear 
whether  by  this  statement  the  court  had  reference  to  the  arbitrary 
prescription  of  rates  in  first  instance  to  the  carriers,  or  merely  to 
action  of  the  Commission  in  prescribing  rates  after  complaint  in 
order  to  redress  grievances. 

Several  decisions  of  circuit  courts  during  1896,  and  finally 
another  leading  case  before  the  Supreme  Court  of  the  United  States, 
reenforced  the  judicial  doubt  as  to  the  validity  of  the  rate-making 
power  of  the  Commission.  Thus,  for  example,  in  the  well-known 
case  of  Coxe  Brothers,  involving  rates  upon  anthracite  coal,  which, 
by  the  way,  had  been  pending  since  1891,  the  Supreme  Court  ex- 
pressly declined  to  enforce  an  order  of  the  Commission,  stating  that 
it  "is  not  clothed  with  the  power  to  fix  rates  which  it  undertook  to 
exercise  in  this  case."  The  court's  reasoning  in  the  Social  Circle 
case  was  followed  and  expressly  cited.  During  the  same  year,  1896, 
other  cases,  such  as  that  of  the  Truck  Farmers'  Association,  were 
decided  in  the  same  spirit.  The  final  adjudication  of  this  point, 
however,  was  reserved  for  the  decision  in  the  so-called  "Freight 
Bureau"  cases.  These  had  their  origin  in  an  application  from  the 
Commission  to  enforce  an  order  issued  in  1894  against  the  Cincin- 
nati, New  Orleans  and  Texas  Pacific  Railroad  Company.  The  case 
involved  the  adjustment  of  rates  from  Eastern  and  Western  cen- 
ters, respectively,  into  the  Southern  States;  and  the  Commission  had 
decided  that  a  reduction  of  the  rates  from  the  Western  cities  was 
5a 


66 

reasonable  and  necessary.  This  leading  case,  also  known  as  the 
"Maximum  Freight  Rate"  decision  of  1896,  is  characterized  by  the 
Commission  itself  as  perhaps  "the  most  important  since  the  enact- 
ment of  the  act  to  regulate  commerce."  It  merits  consideration  in 
some  detail. 

The  Maximum  Freight  Rate  decision  (167  U.  S.,  479),  stripped 
of  legal  verbiage,  holds  that  the  Interstate  Commerce  Commission 
has  no  power  under  the  law  of  1887  to  prescribe  a  rate  for  the  fu- 
ture, although  its  right  to  pass  upon  the  reasonableness  or  unreason- 
ableness of  a  rate  already  paid  and  of  which  complaint  is  made  is 
unquestioned.  The  court  fully  recognized  this  fact,  yet  it  reserved 
to  the  shipper  as  a  protection  for  unreasonable  exactions  merely  the 
right  to  institute  proceedings  for  a  rebate  of  such  excessive  charges 
as  had  already  been  paid.  It  should  be  noted  that  no  denial  what- 
ever of  the  power  of  the  Commission  under  the  law  to  adjudge  rates 
unreasonable  was  entertained  in  this  decision.  What  it  was  em- 
powered to  do  was  merely  to  decide  whether  a  given  rate  was  un- 
reasonable, but  not  to  go  further  and  to  decide  as  to  the  degree  of 
its  unreasonableness.  But  the  difference  between  this  range  of 
powers  and  those  which  had  been  claimed  by  the  Commission  for 
ten  years  is  simply  this:  That  under  the  original  interpretation  of 
the  law  the  Commission  had  not  only  decided  whether  rates  were 
wrong;  it  had  also  prescribed  a  remedy  by  issuing  an  order  as  to 
what  rates  were  right,  believing  that  these  would  be  enforced  by 
the  courts.  Not  even  the  right  to  prescribe  maximum  rates  would 
seem  to  have  remained  to  the  Commission  after  this  interpretation. 
The  only  action  open  to  it  would  be  to  declare  one  rate  after  another 
unreasonable  until  the  carriers  had  been  brought  to  terms.  The  in- 
adequacy of  this  as  a  practical  remedy  remains  to  be  discussed  later. 
At  the  same  time,  while  denying  the  power  to  fix  rates  even  after 
I  complaint,  the  court  affirmed  the  power  to  enforce  various  other 
sections  of  the  act  under  which  rates  were  actually  made. 

EFFECT  OF  MAXIMUM  FREIGHT-RATE  DECISION. 

The  immediate  effect  of  this  decision  was  to  prevent  any  en- 
forcement of  orders  relative  to  rates  by  the  Commission.  The  car- 
riers immediately  refused  to  obey  any  orders  which  the  Commission 
issued  for  the  redress  of  grievances.  This  policy  has  been  mani- 
fested with  increasing  clearness  during  the  five  years  subsequent  to 
the  decision.  It  has  become  more  and  more  certain  that  the  denial 
of  the  right,  not  only  to  pass  upon  the  reasonableness  of  a  particu- 
lar rate,  but  to  prescribe  what  rate  should  supersede  it,  means  the 
abolition  of  all  control  whatever.  The  entire  inadequacy  of  making 
rate  regulation  dependent  upon  the  mere  determination  of  rates  as 
applied  in  the  past  without  reference  to  the  rates  which  shall  prevail 
in  the  future  is  apparent  on  all  sides.  More  than  this,  all  remedy  for 
;the  parties  who  have  borne  the  burden  of  an  unreasonable  rate 
would  seem  to  have  been  removed.  This  has  been  clearly  described 
in  the  report  of  the  Commission  for  1897.  It  may  be  illustrated  by 
the  example  of  rates  upon  oranges.    In  1890  there  was  a  sudden 


67 

advance  on  rates  from  Florida  to  New  York  from  30  to  40  cents. 
The  Commission  after  an  investigation  ordered  that  the  rate  be  re- 
duced to  35  cents.  As  a  matter  of  fact,  how  could  this  action  re- 
dress grievances  of  those  who  had  already  paid  40  cents  per  box? 
It  was  difficult  in  the  first  place  to  discover  who  bore  the  burden  of 
the  unreasonable  charge;  and  in  the  second  place  it  was  certain  that 
some  of  those  who  suffered  could  not  legally  sue  in  court.  The 
actual  shipper  who  alone  could  sue  for  repayment  of  unreasonable 
charges  was  a  middleman  who  recouped  himself  in  any  event,  either 
from  the  grower,  the  consumer,  or  both.  He  lost  nothing  by  reason 
of  the  unreasonable  rate.  As  a  matter  of  fact,  not  any  single  indi- 
vidual, but  the  locality  had  been  mulcted  by  5  cents  per  100  pounds, 
supposing  that  a  rate  of  40  cents  was  unreasonable.  Experience 
shows  that  almost  no  shippers  or  other  parties  injured  actually 
attempt  to  secure  the  restitution  of  moneys  already  paid  for  un- 
reasonable charges.  In  only  5  out  of  225  cases  down  to  1897  was 
a  rebate  actually  sought,  and  in  those  cases  $100  was  the  maximum 
sought  to  be  recovered.  As  a  matter  of  fact  the  damage  inflicted 
by  the  existence  of  such  an  unreasonable  rate  could  not  be  measured 
by  hundreds  or  perhaps  by  hundreds  of  thousands  of  dollars.  The 
bearing  of  this  citation  is  to  show  that  any  effectual  protection  to 
the  shipper  must  proceed  from  adjudication  of  the  reasonableness 
of  rates  before,  and  not  after,  they  have  been  paid;  that  is  to  say,  in 
advance  of  their  exaction  by  the  carrier.  Power  to  pass  upon  the 
reasonableness  of  such  rates  prior  to  their  enforcement,  as  a  conse- 
quence constitutes  practically  the  only  safeguard  -which  the  ship- 
ping public  may  enjoy.  It  will  be  observed  that  in  this  discussion 
reference  is  made  simply  and  solely  to  that  class  of  cases  where 
complaint  is  made  against  the  unreasonableness  of  a  rate  per  se  as 
applied  to  all  shippers  alike,  entirely  distinct  from  the  exercise  of 
powers  by  the  Commission  in  respect  of  unreasonable  discrimina- 
tion as  between  two  or  more  persons. 

OBJECTIONS  TO   POWER  TO   FIX   RATES  IN  ADVANCE. 

Three  objections  to  conferring  power  to  prescribe  rates  in  ad 
vance — that  is  to  say,  to  pass  upon  their  reasonableness  before  they 
can  be  put  in  effect — have  been  urged. 

1.  The  first  is  that  the  exercise  of  such  power  involves  enormous 
sums  of  money  and  the  welfare  and  prosperity  of  entire  industries 
and  sections  of  the  country.  This  has  been  strongly  stated  by 
Walker  D.  Hines,  now  vice-president  of  the  Louisville  and  Nashville 
Railroad,  one  of  the  opponents  of  such  amendment  of  the  act: 

"Having  this  arrangement  it  is  calmly  proposed  to  leave  to  the 
judgment  of  five  men — of  three  if  the  five  do  not  agree — trained  as 
lawyers,  representing  five  localities  in  all,  with  power  to  ruin  indus- 
tries, to  boom  towns,  to  determine  whether  the  Kansas  farmer  shall 
burn  his  corn  for  fuel  or  send  it  to  market,  and  with  power  at  th( 
same  time  to  make  or  break  every  railroad  corporation  in  the  land, 
to  send  any  railroad  stocks  or  bonds  up  or  down  in  the  stock  market, 
to  control  importations  of  every  kind  and  to  limit  all  exportations. 


68 

to  exclude  Baltimore  or  Boston  or  any  other  city  from  the  transact- 
ing of  export  business,  of  changing  existing  differentials,  to  array 
the  North  against  the  South,  the  East  against  the  West,  by  OT'erturn- 
ing  conditions  established  by  competition  and  substituting  therefor 
the  decree  of  the  "rule  of  thumb."  In  fact,  to  absolutely  dominate 
this  land  of  ours  with  the  power  of  pagan  consuls.'" 

No  denial  whatever  of  the  arbitrary  and  enormous  power  which 
the  right  to  make  freight  rates  imposes  can  be  entertained  for  a 
moment.  A  pertinent  question,  however,  is  as  to  whether  the  exer- 
cise of  such  power  by  irresponsible  railroad  managers,  as  at  present, 
is  any  more  reasonable.  If,  according  to  the  statement  of  the  rail- 
road interests  themselves,  the  power  to  make  freight  rates  involves 
the  right  to  make  or  break  men,  industries,  and  even  the  prosperity 
of  entire  States,  how  great  is  the  necessity  for  adequate  supervision, 
subject  to  appeal  to  the  courts! 

This  is  apparently  recognized  by  the  more  conservative  repre 
sentatives  of  the  carriers  themselves,  as  evidenced  by  testimony  be- 
fore the  Industrial  Commission.  Under  the  circumstances  at  pres- 
ent prevalent  this  arbitrary  power  is  exercised  by  one  party,  namely, 
the  traffic  managers  of  the  railroads  in  interest,  without  any  appeal 
whatever.  If  the  powers  of  the  Interstate  Commerce  Commission 
were  to  be  rehabilitated  by  amendment  of  the  act,  it  would  simply 
mean  that  the  public  interests  and  those  of  the  shippers  would  be 
entitled  to  representation  in  originally  fixing  the  rates,  leaving 
thereafter  the  final  decision  in  contested  cases  for  judicial  deter- 
mination. 

2.  A  second  objection  to  conferring  any  enlargement  of  powers 
in  the  matter  of  rate  making  upon  the  Interstate  Commerce  Commis-* 
sion  is,  that  the  granting  of  any  power  to  prescribe  rates  in  advance 
of  their  enforcement  means  of  necessity  a  transfer  of  the  entire  rate- 
making  power  from  the  railroads  to  a  governmental  administrative 
body.  It  has  been  persistently  urged  before  the  Industrial  Commis- 
sion that  no  middle  ground  between  these  two  extremes  exists.  Ic 
must  be  conceded  that  there  is  some  justification  for  this  claim  of 
the  carriers  that  the  right  to  prescribe  any  rates  may  mean  the 
exercise  of  power  to  prescribe  all  rates.  For  in  the  first  place  it  Is 
undoubtedly  true  that  no  rate  can  be  altered,  even  in  a  slight  degree, 
without  at  the  same  time  disturbing  other  rates,  not  only  in  the 
adjacent  territory,  but  perhaps  all  over  the  country.  So  complex 
and  far-reaching  are  adjustments  of  rates  in  many  parts  of  the 
United  States  that  disturbance  of  a  single  charge  may  involve  a 
recasting  of  the  entire  schedule  of  rates  throughout  many  States. 
This  is  the  most  serious  phase  of  the  question  to  be  considered.  It 
may  be  illustrated  in  another  way.  Almost  all  the  rates  for  long 
distances  are  made  up  by  several  carriers,  publishing  together  what 
are  known  as  joint  rates.  Any  determination  of  the  reasonableness 
of  a  long-haul  rate  necessarily  involves  a  readjustment  of  all  these 
divisions.  Thus,  for  example,  to  quote  again  from  the  Interstate 
Commerce  Commission's  reports,  suppose  there  be  a  complaint  that 
the  rate  from  Chicago,  111.,  to  Kearney,  Nebr.,  is  unreasonable.  This 
cate  is  compounded  of  an  interstate  rate  from  Chicago  to  Omaha, 


69 

plus  a  local  rate  prescribed  by  the  State  commission  of  Nebraska. 
Nevertheless,  the  only  rates  over  which  the  Interstate  Commerce 
Commission  may  have  jurisdiction  is  the  proportion  from  Chicago 
to  Omaha.  The  Commission  might  compel  the  whole  rate  to  be 
reduced,  but  it  could  not  allot  that  reduction  between  the  several 
carriers.  To  prescribe  reasonable  rates,  therefore,  means  neces 
sarily  to  go  farther  and  control  the  pro-rating  of  charges  all  along 
the  line.  On  the  other  hand,  as  against  the  claim  that  the  exercise 
by  the  Commission  of  the  right  to  prescribe  rates  involves  the  trans- 
fer of  all  rate-making  power  for  the  roads  of  the  country  to  an  ad- 
ministrative Commission,  it  may  be  urged  that,  during  the  ten  years 
that  this  power  was  supposed  to  exist,  no  such  revolutionary  effect 
was  discernible.  So  long  as  the  Commission  is  restricted  to  issuing 
orders  only  upon  complaint  and  after  investigation,  it  is  scarcely  to 
be  feared  that  the  roads  will  be  deprived  of  their  right  to  promul- 
gate rates  in  first  instance  for  themselves.  The  distinction  must,  of 
course,  be  very  sharply  drawn  between  these  two  courses  of  action. 
First,  the  conservative  one.  which  merely  recognizes  the  Commis- 
sion's right  to  make  rates  in  cases  where  there  is  prima  facie  evi- 
dence of  unreasonableness;  and  secondly,  the  far  more  revolution- 
ary one,  which  has  never  been  claimed  by  the  Commission  or  for  it, 
to  make  up  the  rate  and  classification  schedules  for  the  railroads  of 
the  United  States,  as  is  done  by  some  of  the  State  railroad  commis- 
sions. Such  a  task  would  undoubtedly  be  beyond  the  power  of  any 
Federal  commission,  however  large  or  omniscient.  It  would  involve 
a  usurpation  of  the  rights  which  are  inherent  under  our  Constitu- 
tion in  the  conduct  of  even  semi-private  business. 

3.  The  third  and  final  objection  to  conferring  the  rate-making 
power,  not  in  first  instance,  as  is  continually  to  be  kept  in  view,  but 
only  after  complaint  and  investigation,  is  that  it  involves  the  injus- 
tice of  a  commission  sitting  in  judgment  upon  a  case  which  it  has 
made  for  itself.  It  has  been  repeatedly  urged  that  to  clothe  the 
Commission  with  such  power  is,  under  the  method  of  procedure 
adopted,  a  violation  of  all  long-established  rules  of  legal  adjudica- 
tion. The  best  answer  to  this  allegation  is  a  statement  of  the  case 
as  it  exists  to-day.  If  this  be  an  intolerable  situation,  is  it  less  un- 
reasonable that  the  traffic  managers  of  the  railroads  should  reserve 
to  themselves  the  entire  right  to  pass  upon  the  reasonableness  of 
the  rates  which  they  have  themselves  put  in  force  for  the  use  of 
shippers?  Two  parties  are  concerned,  the  shippers  and  the  rail- 
roads, whose  interests  are  often  conflicting.  The  burden  of  com- 
plaint at  the  present  time  is  that  the  railroads  are  the  sole  arbiters 
as  to  reasonable  rates,  and  it  seems  illogical,  therefore,  however 
expedient  as  a  matter  of  policy  it  may  be  for  them  to  allege  the 
injustice  of  such  a  situation  as  a  ground  for  objection  to  conferring 
rate-making  supervision  upon  a  governmental  commission.  Nor  is 
tlie  objection  valid  in  fact,  for  while  the  Commission  may  in  some 
cases  institute  proceedings  before  itself,  yet  it  does  so  merely  as 
representing  the  interests  of  ship'pers  or  others.  By  and  for  itself 
it  should  have  no  interest  at  stake  except  to  secure  the  enforcement 
of  the  law  and  the  equitable  adjustment  of  all  interests  involved. 


fO 


POSSIBLE   COURSES  OF  ACTION   AS   TO   SUPERVISION   OF 

RATES. 

There  are  two  possible  courses  of  action  in  respect  of  rate- 
making  supervision  or  control. 

1.  The  first  is  to  leave  all  such  adjudication  to  the  courts.  This 
is  practically  the  situation  at  the  present  time.  Some  of  the  diffi- 
culties have  already  been  outlined  at  length.  Another  equally  im- 
portant one  is  that  adjudication  hy  the  courts  can  not  secure  an 
adequate  remedy.  The  only  redress  for  an  unreasonable  rate  is  a 
changing  of  the  rate  itself — that  is  to  say,  an  order  compelling  the 
application  of  a  new  freight  rate  to  suit  the  circumstances.  This 
remedy  can  not  be  secured  under  our  Constitution,  inasmuch  as  tho 
functions  of  the  United  States  courts  are  and  must  be  entirely 
judicial.  The  Supreme  Court  itself  has  clearly  recognized  the  differ- 
ence between  administrative  and  legislative  functions  in  this  rp- 
spect.  The  duty  of  the  courts  is  merely  to  pass  upon  rates  as  made. 
To  order  the  substitution  of  other  and  different  rates  would  involve 
the  exercise  of  the  legislative  power  from  which  they  are  by  their 
nature  debarred.  If  it  be  permitted  to  criticise  the  course  of  reason- 
ing outlined  in  the  decision  of  the  learned  judges,  it  appears  as  if 
they  had  interpreted  the  powers  of  the  Interstate  Commerce  Com- 
mission much  as  if  it  were  a  judicial  rather  than  an  administrative 
body.  They  have,  in  other  words,  refused  to  view  the  Commission 
in  any  other  light  than  as  a  railroad  court.  This  is  the  more  sur- 
prising, as  from  the  outset,  particularly  in  their  decisions  respecting 
power  to  compel  testimony,  tliej'  have  distinctly  refrained  from 
recognizing  the  validity  of  such  a  view.  In  conclusion,  then,  respect- 
ing this  as  a  possible  remedy,  namely,  that  the  courts  be  left  to 
constitute  the  only  safeguard  for  the  interests  of  the  public  and  the 
carriers,  the  experience  of  the  last  five  years,  since  the  maximum 
freight  rate  decision,  has  shown  its  utter  inadequacy  to  correc, 
abuses  of  which  complaint  is  made. 

2.  The  second  possible  course  of  action  is  to  clothe  the  Commis- 
sion with  enlarged  powers  in  respect  of  supervision  and  control 
over  rate  making.  Such  is  the  legislation  proposed  in  the  Cullom 
bill.  Under  it,  as  at  the  present  time,  the  courts  remain  the  final 
arbiters  in  contested  cases  upon  appeal.  The  railroads  are  still,  as 
they  have  been  in  fact  since  1887,  left  to  promulgate  their  rates,  and 
to  manage  their  business.  The  only  innovation  is  that  when  a  rate 
has  been  once  adjudged  by  the  Interstate  Commerce  Commission  to 
be  in  violation  of  the  Act  to  regulate  commerce,  the  carrier  may  bo 
compelled  to  modify  its  rates  accordingly.  There  still  remains  the 
right  of  appeal  to  the  courts.  The  necessity  of  this  is  recognized  on 
all  sides,  since  no  single  body  of  men  can  be  omniscient  and  in- 
fallible. The  burden  of  instituting  such  an  appeal  is  shifted  from 
the  Commission  to  the  carrier.  The  onus  probandi  is  imposed  upon 
the  carrier  to  show  that  the  order  of  the  Commission  is  unreason- 
able. Unless  appeal  shall  be  taken  within  thirty  days,  the  rate  pre- 
scribed by  the  Commission  shall  become  valid  and  enforceable.  It 
is  urged  by  the  Interstate  Commerce  Commission  that  such  legisla- 


71 

tion  must  be  accompanied  by  the  further  provision  that  the  rates 
prescribed  by  it  shall  be  effective  pending  appeal.  The  Cullom  bill' 
covers  this  point  by  making  the  order  of  the  Commission  effective, 
unless  the  circuit  court  shall  by  special  order  set  it  aside  pending 
the  final  adjudication.  While  there  is  much  evidence  to  support  the 
reasonableness  of  this  contention,  it  is  strenuously  opposed  by  the 
carriers.  Some  effective  remedy  for  the  intolerable  conditions  which 
prevail  under  the  law  to-day  must  certainly  be  provided. 

RECOMMENDATIONS  OF  THE  INDUSTRIAL  COMMISSION. 

To  the  end  that  discrimination  and  inequality  as  between  ship- 
pers, and  maladjustment  of  freight  rates  between  competing  mar- 
kets and  trade  centers,  may  be  abolished  or  minimized;  that  the 
public  may  be  assured  of  reasonable  and  stable  freight  rates,  which 
will  at  the  same  time  afl'ord  fair  returns  upon  capital  investment; 
that  the  interest  of  investors  in  American  railroad  securities  may 
be  protected;  and  that  undue  inflation  of  capitalization,  and  fraudu- 
lent or  speculative  manipulation  of  business  by  directors  or  other 
interests  in  control,  may  be  prevented,  we  recommend — 

1.  That  the  policy  of  governmental  supervision  and  control  of 
railroads,  as  originally  laid  down  in  the  Senate  committee  report  of 
1886,  and  embodied  the  following  year  in  the  interstate-commerce 
act,  be  revived  and  strengthened;  that  the  authority  of  the  Inter- 
state Commerce  Commission,  necessary  for  the  adequate  protection 
of  shippers  and  clearly  intended  by  the  framers  of  the  law,  be  re- 
stored and  that  the  powers  and  functions  of  the  commission  be 
enlarged  practically  as  contemplated  in  the  so-called  Collum  bill 
of  1900,  except  as  to  authority  to  prepare  and  enforce  a  uniform 
classification. 

Specifically,  but  regardless  of  legal  phraseology,  such  legisla- 
tion should  provide — 

{a)  For  more  stringent  regulation  of  the  conditions  under 
which  freight  and  passenger  tariffs  are  published  and  filed,  in  order 
to  secure  greater  publicity  both  in  respect  to  establish  rates  and 
contemplated  changes. 

No  rate  or  classification  ought  to  be  changed  without  at  least 
sixty  days'  notice  to  shippers,  unless  specifically  authorized  by  the 
Interstate  Commerce  Commission.  All  charges,  privileges,  or  facil- 
ities, such  as  storage  or  free  delivery,  and  all  pertinent  rules  or 
regulations  affecting  transportation,  ought  to  be  fully  and  plainly 
stated. 

(6)  That  strict  adherence  to  published  tariffs  be  required  and 
rebates  or  discrimination  prevented  by  an  increase  of  the  penalties 
therefor. 

These  penalties  should  lie  not  only  against  the  person  who 
gives  but  also  against  the  one  who  accepts  discrimination  in  any 
form  whatsoever.  Corporations  should  be  made  liable  the  same 
as  individuals.  The  penalty  against  the  carrier  for  any  departure 
from  the  published  tariff,  or  for  neglect  or  refusal  to  obey  any  final 


72 

administrative  order  of  the  commission,  should  be  a  heavy  fine 
($5,000  or  more)  and  cumulative  for  each  offense.  Provisions  for 
imprisonment  in  the  present  law  should  be  repealed.  Penalties  for 
testifying  falsely  should  be  prescribed,  as  for  perjury  in  the  Eevised 
Statutes  of  the  United  States. 

(c)  That  the  long-and-short-haul  clause,  in  section  4  of  the  act 
of  1887,  be  strengthened  and  rigidly  enforced,  unless  the  carriers 
shall  be  released  by  special  order  of  the  Interstate  Commerce  Com- 
mission in  view  of  dissimilar  conditions,  as  provided  by  the  act, 
the  commission  at  the  same  time  prescribing  the  extent  to  which 
any  departure  therefrom  shall  prevail. 

This  reverses  the  present  practice,  which  permits  the  carriers 
to  decide  for  themselves  when  and  to  what  extent  conditions  are 
dissimilar. 

(d)  For  the  definite  grant  of  power  to  the  Interstate  Commerce 
Commission,  never  on  its  own  initiative,  but  only  on  formal  com- 
plaint, to  pass  upon  the  reasonableness  of  freight  and  passenger 
rates  or  charges;  also  the  definite  grant  of  power  to  declare  given 
rates  unreasonable,  as  at  present,  together  with  power  to  prescribe 
reasonable  rates  in  substitution. 

(e)  For  early  hearings  upon   complaints  and  for    prompt    de 
cisions  by  the  commission,  the  purpose  being  to  obviate  intolerable 
delays. 

Thirty  days  should  be  the  limit  of  time  for  appeal  to  the  cir- 
cuit court.  Appeal  from  an  administrative  order  of  the  commis- 
sion should  not  vacate  or  suspend  an  order  unless  it  plainly  ap- 
pears that  such  order  proceeds  upon  some  error  of  law  or  is  unjust 
or  unreasonable  on  the  facts,  in  which  case,  and  not  otherwise,  the 
court  may  suspend  its  operation  during  the  pendency  of  proceed- 
ings in  review.  All  findings  of  fact  by  the  commission,  when  prop- 
erly certified,  should  be  received  as  prima  facie  evidence  in  subse- 
quent proceedings  in  the  case;  such  certification  should  be  fur- 
nished within  twenty  days.  New  testimony  offered  by  either  party, 
when  it  appears  that  such  testimony  is  material  and  could  not  have 
been  taken  in  the  first  instance,  should  be  taken  by  the  Interstate 
Commerce  Commission  on  order  from  the  court.  The  time  in 
which  an  appeal  to  the  Supreme  Court  of  the  United  States  may 
be  taken  should  be  limited  to  thirty  days,  but  such  appeal  should 
not  vacate  or  suspend  the  order  appealed  from. 

if)  For  a  specific  grant  of  power  to  the  Interstate  Commerce 
Commission  over  classification,  both  as  to  items  and  grouping. 

Coupled  with  this,  however,  we  dissent  from  the  section  of  the 
so-called  Cullom  bill  requiring  the  Interstate  Commerce  Commis- 
sion within  a  certain  period  to  promulgate  a  uniform  classification 
for  the  United  States.  This  is  not  intended  to  detract  from  the 
importance  or  desirability  of  greater  uniformity  in  classification, 
but  action  to  this  end  should  be  taken  by  the  carriers  on  their  own 
initiative. 

(g)  For  the  establishment  of  a  permanent  corps  of  expert  audi- 
tors who  shall  have  authority,  under  the  supervision  of  the  Inter- 


73 

state  Commerce  Commission,  to  examine  periodically  the  accounts 
of  all  railroad  companies,  whether  operating  or  financial  in  their 
nature. 

Provisions  for  securing  publicity  in  respect  of  financial  and 
operating  facts  should  be  made.  Such  examinations  for  detection 
of  violations  of  law  or  for  statistical  returns  should  be  subject  to 
provisions  safeguarding  confidential  information  similar  to  those 
which  now  prevail  in  the  case  of  the  inspection  of  national  banks. 

(7i)  That  violations  of  the  act,  respecting  the  keeping  and  filing 
of  annual  reports  by  carriers,  should  be  made  misdemeanors,  and 
promptness  in  making  such  returns  should  be  required. 

2.  That,  to  further  the  effectiveness  of  the  commission,  its 
membership  should  be  directly  representative  of  the  various  inter- 
ests concerned,  in  the  persons  of  shippers  or  business  men,  traffic 
experts  (rail  and  water),  and  men  of  legal  training,  and  the  num- 
ber of  commissioners  should  be  increased  to  seven, 

3.  That  legislation  analogous  to  the  anti-stock-watering 
statutes  of  Massachusetts  be  enacted  by  the  several  States  in  order 
to  prevent  overcapitalization  and  to  secure  supervision  over  the 
promotion  and  financing  of  railroad  organizations  and  consolida- 
tions; and  that  new  railroad  construction  should  be  regulated  so  as 
to  prevent  unwise  paralleling  of  existing  lines. 

4.  That  railroad  companies  be  prohibited  by  law  from  making 
lower  freight  rates  upon  imports  billed  to  the  interior  of  this  coun- 
try, in  connection  with  ocean  transportation  or  otherwise,  than  are 
made  on  similar  articles  from  the  seaboard  to  the  interior,  or  than 
are  made  from  one  inland  point  to  another  when  the  distance  is 
not  greater. 


74 
THE  COOPER-QUARLES  BILL  (H.  R.  6273  and  S.  2439). 


A  Bill  Further  to  Define  the  Duties  and  Powers  of  the 
Interstate  Commerce  Commission. 


Be  it  enacted  by  the  Senate  and  House  of  Representatives  of  the 
United  States  of  America  in  Congress  assembled,  That  any  order 
made  by  the  Interstate  Commerce  Commission,  after  hearing 
and  determination  had  on  any  petition  now  pending  or  here- 
after presented,  pursuant  to  section  thirteen  of  an  act  entitled 
"An  act  to  regulate  commerce,"  approved  February  fourth, 
eighteen  hundred  and  eighty-seven,  declaring  any  existing  rate 
or  rates  in  said  petition  complained  of  for  the  transportation  of 
persons  or  property,  or  any  regulation  or  practice  affecting  such 
rates,  or  facilities  afforded  in  connection  therewith,  to  be  un- 
justly discriminating  or  unreasonable,  and  declaring  what  rate 
or  rates,  regulation,  or  practice  affecting  such  rate  or  rates  would 
be  just  and  reasonable,  and  requiring  them  to  be  substituted 
therefor,  shall  become  operative  and  be  observed  by  the  party 
or  parties  against  whom  the  same  shall  be  made  within  thirty 
days  after  notice,  or,  in  case  of  proceedings  for  review,  as  here- 
inafter provided,  then  within  sixty  days  after  notice;  but  such 
order  may  at  any  time  be  modified,  suspended,  or  revoked  by 
the  Commission  upon  full  hearing  of  all  parties  in  interest. 

Sec.  2.  That  when  the  rate  substituted  by  the  Commission  as 
hereinbefore  provided  is  a  joint  rate,  and  the  carriers,  parties 
thereto, fail  to  agree  upon  the  apportionment  thereof  among  them- 
selves within'  twenty  days  after  notice  of  such  order,  the  Com- 
mission may  issue  a  supplemental  order  declaring  the  portion 
of  such  joint  rate  to  be  received  by  each  carrier  party  thereto, 
which  order  shall  be  observed  by  such  carriers.  When  the 
order  of  the  Commission  prescribes  the  just  relation  of  rates  to 
or  from  common  points  on  the  lines  of  the  several  carriers  par- 
ties to  the  ])roceeding,  and  such  carriers  fail  to  notify  tlie  Com- 
mission within  twenty  days  after  notice  of  such  order  that  they 
have  agreed  among  themselves  as  to  the  changes  to  be  made  to 
effect  compliance  tlierewith,  the  Commission  may  issue  a  sup- 
plemental order  prescribing  the  rates  to  be  charged  to  or  from 
such  common  points  by  either  or  all  of  the  parties  to  the  pro- 
ceeding, which  order  shall  be  observed  by  the  carriers  concerned. 

Sec.  3.  That  every  order,  as  to  its  justness,  reasonableness,  and 
lawfulness,  shall  be  reviewable  by  any  circuit  court  of  the  United 
States  for  any  district  through  which  any  portion  of  the  road  of 
any  carrier  named  in  such  order  shall  run,  to  which  a  petition 
filed  on  its  equity  side,  within  twenty  days  from  the  service  of 
such  order,  shall  be  first  presented  by  any  party  interested.  It 
shall  be  the  duty  of  the  Commission,  within  twenty  days  after 
notice,  to  cause  to  be  filed  in  any  court  to  which  such  petition 
shall  have  been  so  presented  a  duly  certified  copy  of  its  entire 
record  in  connection  with  the  order  to  be  reviewed,  including 
petition,  answers,  testimony,  report  and  opinion  of  the  Commis- 
sion, its  order,  and  all  other  papers  whatsoever  in  connection 
therewith.     The  court  shall  thereupon  proceed  to  hear  the  same 


75 

upon  petition,  record,  and  testimony  returned  by  the  Commis- 
sion j  or,  in  its  discretion,  may,  upon  the  application  of  either 
party  and  in  such  manner  as  it  shall  direct,  cause  additional 
testimony  to  be  taken;  and  thereu[)on  if,  after  hearing,  said 
court  shall  be  of  the  opinion  that  said  order  was  made  under 
some  error  of  law,  or  is,  upon  the  facts,  unjust  or  unreasonable, 
it  shall  modify,  set  aside,  or  annul  the  same  by  appropriate 
decree;  otherwise  the  petition  shall  be  dismissed.  Pending 
such  review,  however,  the  court  may,  upon  application  and 
hearing,  if  in  its  opinion  the  order  is  clearly  unlawful  or  erro- 
neous, suspend  said  order.  Any  party  to  the  cause  may,  within 
thirty  days  of  the  rendition  of  any  final  decree  of  said  court, 
appeal  to  the  Supreme  Court  of  the  United  States,  which  court 
shall  proceed  to  hear  and  determine  such  appeal.  But  neither 
the  order  of  the  circuit  court  nor  the  execution  of  any  writ  or 
process  thereon  shall  be  stayed  or  suspended  during  the  pend- 
ency of  such  appeal.  The  said  several  courts  of  the  United 
States  shall  be  and  are  vested  with  full  jurisdiction  and  all  nec- 
essary powers  in  the  premises.  The  case  in  both  the  circuit 
court  and  the  Supreme  Court  shall  have  precedence  over  all 
except  criminal  cases. 

Sec,  4.  That  the  defense  in  all  such  proceedings  for  review  shall 
be  undertaken  by  the  United  States  district  attorney  for  the  dis- 
trict wherein  the  action  is  brought,  under  the  direction  of  the  At- 
torney General  of  the  United  States,  and  the  costs  and  expenses 
of  such  defense  shall  be  paid  out  of  the  appropriation  for  the  ex- 
penses of  the  courts  of  the  United  States.  The  Commission  may, 
with  the  consent  of  the  Attorney  General,  employ  special  coun- 
sel in  any  proceedings  under  this  act,  paying  the  expense  of 
such  employment  out  of  its  own  appropriation. 

Sec.  5.  That  if  any  party  bound  thereby  shall  refuse  or  neg- 
lect to  obey  or  perform  any  order  of  the  Commission  mentioned 
in  section  one  of  this  act  at  any  time  while  the  same  is  in  force, 
obedience  and  performance  thereof  shall  be  summarily  enforced 
by  writ  of  injunction  or  other  proper  process,  mandatory  or 
otherwise,  which  shall  be  issued  by  any  circuit  court  of  the 
United  States  upon  petition  of  said  Commission  or  of  any  party 
interested,  accompanied  by  a  certified  copy  of  the  order  alleged 
to  be  violated  and  evidence  of  the  violation  alleged,  and  in  addi- 
tion thereto  the  offending  party  shall  be  subject  to  a  penalty  of 
five  thousand  dollars  for  each  day  of  the  continuance  of  such 
violation,  which,  together  with  costs  of  suit,  shall  be  recoverable 
by  said  Commission  by  action  of  debt  in  any  circuit  court  of 
the  United  States,  and  when  so  recovered  shall  be  for  the  use  of 
the  United  States. 

Skc.  6.  That  all  acts  or  parts  of  acts  in  conflict  with  the  pro- 
visions of  this  act  are  hereby  repealed,  but  such  repeal  shall  not 
aff"ect  causes  now  pending  in  court  nor  rights  which  have  already 
accrued,  but  such  causes  shall  be  prosecuted  to  a  conclusion 
and  such  rights  enforced  in  a  manner  heretofore  provided  by 
law.  All  existing  laws  relative  to  testimony  in  cases  or  pro- 
ceedings under  or  connected  with  the  Act  to  Regulate  Commerce 
shall  also  apply  to  any  case  or  proceeding  authorized  by  this  act. 

Sec.  7.  That  this  act  shall  take  eflfect  from  its  passage. 


INDEX. 


Page 

Advances  in  Rates -■■  3 

Appeals  to  Courts 59 

Basing  Point  System 33 

Basis  of  Capitalization 51 

Carload  Rates 39 

Capitalization,  Increase  of 46 

Combination  of  Factors  in         55 

and  Rates 56 

Classification  Changes 3,  4 

Freight 38 

Progress  toward  Uniformity  of 43 

Proposed  Uniform  44 

Combination  of  Factors  in  Capitalization 55 

Commodity  Rates 42 

Comparison  of  Local  and  Through  Rates 1 

Competition,  Nature  and  Eflfects  of 22 

Consolidations  of  1898  to  1900 13 

Recent 17 

Effect  of. 19,  20 

Cooper  Bill 1,74 

Cost  of  Reproduction 53 

Decisions,  Delay  in — Appeals  to  Courts.  ^ 59 

of  Courts  Restricting  Powers  of  Commission 64 

Discriminations — Railroad  and  Industrial  Combinations 23 

Between  Eastern  and  Western  Cities 31 

Effect  of  Consolidation  on  19 

Earning  Capacity ■ 52 

Effect  of  Consolidation  on  Adjustment  between  Localities 20 

Discriminations 19 

Freight  Rates 19 

Future  Railroad  Construction 11 

Level  of  Rates . .      19 

Rail  road  Com  petition 22 

Effect  of  Increased  Volume  of  Business  on  Railroad  Earnings 8 

Maximum  Freight  Rate  Decision 66 

Export  Rates 30 

Freight  Classification 38 

Freight  Rates  and  Prices 27 

Advances  of 3 

Carload 39 

Commodity •  •  •  •  ^2 

Comparison  of  Local  and  Through 1 

Effects  of  Consolidation  on 19 

Export •  30 

Import 28 

On  Wheat  and  Flour 30 

Transcontinental 35 

General  Freight  Rate  Advances 3 

Governmental  Supervision  and  Control  of  Railroads 71 

How  Far  are  Causes  of  Present  Railroad  Prosperity  Permanent? 10 

mport  Rates 28 

Increased^Capitalization ^^ 

Industrial  Combinations,  Discrimination _  •  •  •  23 

Interstate  Commerce  Commission,  Effect  of  Maximum  Freight  Rate  Decision.  66 

Decisions  of  Courts  Restricting  Power  of.  64 

Delay  in  Decisions 59 

Position  and  Powers  of. 58 

Powers  of,  Respecting  Testimony,  etc 62 

Procedure  Before 59 

(77) 


78 

Page 

Interstate  Commerce  Law  Convention .  1 

Justification  of  Advances  in  Rates 7 

Lacii  of  Effective  Remedy 60 

Maximum  Freijjht  Rate  Decision,  Effect  of 66 

Nature  and  P^ffects  of  Railroad  Competition 22 

Nature  and  Method  of  Stock  Watering 49 

Necessity  and  Difficulties  of  Regulation 23 

Objections  to  Power  to  Fix  Rates  in  Advance 67 

Progress  toward  Uniformity  of  Classification 43 

Proposed  Uniform  Classification 44 

Permanence  of  Factors  of  Railroad  Prosperity 10 

Position  and  Powers  of  the  Interstate  Commerce  Commission  ...         58 

Possible  Course  of  Action  as  to  Supervision  of  Rates  70 

Powers  of  the  Commission  Respecting  Testimony,  etc 62 

Private  Car  Shipments   24 

Procedure  Befoie  the  Interstate  Commerce  Commission 59 

Quarles  Bill 74 

Railroad  Discrimination  and  Industrial  Combination 23 

Rates — Carload 39 

Commodity ....  42 

Export 30 

Import 28 

on  Wheat  and  Flour 30 

Power  to  Fix 67 

Supervision  of . .    70 

Transcontinental 35 

Recent  Railroad  Consolidations 17 

Recommendations  of  Industrial  Commission 71 

Regulation,  Necessity  and  Difficulties  of 23 

Remedy,  Lack  of  Effective 60 

in  Procedure  Suggested 61 

Southern  Rate  Situation 31 

Stable  and  Equal  Kates  vs.  Low  Rates 26 

Statistical  Results  of  Railroad  Consolidation 14 

Slocks  vs.  Bonds 48 

Stock  Watering,  Nature  and  Method  of 49 

Supervision  of  Rates,  Possible  Course  of  Action 70 

Transcontinental  Rates  35 

Uniformity  of  Classification,  Progress  toward 43,  44 


Amendment 


OF    THE  ""  ^9^^ 


Interstate  Commerce  Law 


ARGUMENTS  AND  STATEMENTS 

MADE   BEFORE 

INTERSTATE   COMMERCE   COMMITTEES 

IN  THE  FIFTY-SEVENTH  CONGRESS 

IN    FAVOR   OF 

ENLARGING  THE  POWERS 

OF   THE 

INTERSTATE  COMMERCE  COMMISSION 


PUBLISHED   BY 

THE  INTERSTATE  COMMERCE  LAW  CONVENTION 

19  0  4 


AMENDMENT  OF  THE  INTERSTATE  COMMERCE  LAW. 


Enlargement  of  the  Powers  of  the  Interstate  Commerce 

Commission  and  Speedy  Enforcement 

of  its  Orders. 


The  Chairman  of  the  Executive  Committee  of  the  Interstate  Com- 
merce I^aw  Convention  has  submitted  to  the  Committee  on  Interstate 
and  Foreign  Commerce  of  the  House  of  Representatives,  Fifty-eighth 
Congress,  the  following  comprehensive  statement  relating  to  the  pend- 
ing measure,  known  as  the  Cooper-Quarles  bill  (H.  R.  6273  and  S. 
2439),  and  argument  as  to  the  necessity  of  remedial  legislation  : 

To  the  Committee  on  Interstate  and  Foreign  Commerce 

of  the  House  of  Representatives  of  the  United  States. 

Gentlemen  :  I  beg  leave,  in  behalf  of  the  Executive  Committee 
of  the  Interstate  Commerce  Law  Convention,  of  which  I  have  the 
honor  to  be  chairman,  to  present  a  few  points  for  your  consideration 
in  relation  to  the  proposed  amendment  of  the  Interstate  Commerce 
Law  on  the  lines  indicated  in  Bill,  H.  R.  6273,  introduced  in  the 
House  of  Representatives  December  8th,  1903,  by  Hon.  H.  A. 
Cooper,  of  Wisconsin. 

The  convention  referred  to  was  held  at  St.  Louis,  Mo.,  Novem- 
ber 20th,  1900,  and  consisted  of  delegates  from  forty-one  organiza- 
tions representing  various  commercial  and  manufacturing  interests 
in  different  parts  of  the  country,  having  been  called  for  the  purpose 
of  promoting  the  passage  of  the  bill  known  as  the  Cullomj  Bill, 
comprising  various  important  amendments  to  the  "Act  to  Regulate 
Commerce,"  which  had  been  endorsed  by  a  convention  of  delegates 
from  commercial  organizations  held  in  Chicago  in  November  of  the 
previous  year,  and  was  introduced  in  the  Senate  at  the  first  session 
of  the  56th  Congress,  through  the  influence  of  representatives  of 
the  commercial  organizations  referred  to.  This  bill  having  failed 
of  passage,  a  new  bill  was  prepared  under  the  direction  of  the  com- 
mittee which  I  represent,  and  was  introduced  at  the  first  session  of 
the  57th  Congress,  in  both  houses,  which  was  known  as  the  Nelson- 
Corliss  Bill,  exhaustive  hearings  on  which  were  held  before  your 
honorable  committee  during  the  months  of  April  and  May,  1902. 
This  bill  was  more  limited  in  its  scope  than  the  Cullom  Bill,  being 
confined  to  two  or  three  of  the  provisions  of  the  latter  which  were 
deemed  of  prime  importance.  Another  bill,  known  as  the  Elkins 
Bill,  similar  in  its  provisions  to  the  Nelson-Corliss  Bill,  and  compris- 
ing in  addition  a  section  legalizing  the  pooling  of  railway  traffio 


or  earnings,  and  authorizing  the  formation  of  traffic  associations,  was 
introduced  in  the  Senate,  at  the  same  session,  hearings  on  which, 
together  with  the  Nelson-Corliss  Bill,  were  held  by  the  Senate  Com- 
mittee on  Interstate  Commerce  contemporaneously  with  the  hear- 
ings previously  mentioned  held  before  your  committee.  The  portion 
of  the  Elkins  Bill  relating  to  the  prevention  of  discrimination  be- 
tween individual  shippers  by  means  of  the  payment  of  rebates  or 
otherwise,  was  favorably  reported  to  the  Senate,  and  was  passed  by 
both  houses  of  Congress  and  became  a  law. 

SCOPE  AND  EFFECT  OF  THE  ELKINS  ACT. 

It  is  generally  believed  that  this  has  proved  effectual  in  abat- 
ing the  great  evil  of  individual  discrimination  in  charges  and  facili- 
ties for  the  transportation  of  property  formerly  prevalent  through- 
out the  country.  It  does  not  extend,  however,  to  the  prevention 
of  unjust  discrimination  in  published  tariff  rates  between  different 
localities  and  sections,  and  between  different  descriptions  of  traffic, 
which  is  the  subject  of  serious  complaint  on  the  part  of  shippers  in 
various  parts  of  the  country,  from  which,  under  the  existing  law, 
no  practical  means  of  relief  is  afforded;  nor  does  it  attempt  to  afford 
protection  to  the  public  from  the  continuance  of  rates  unreasonable 
in  themselves.  The  Nelson-Corliss  Bill  was  not  reported  by  either 
of  the  committees  of  the  respective  houses. 

The  Elkins  Bill,  as  originally  presented  to  the  Senate,  was  in- 
troduced through  the  instrumentality  of  the  Pennsylvania  Railroad 
Company,  and  its  provisions  coincided  in  the  main  with  those  con- 
tained in  the  Nelson-Corliss  Bill,  and,  satisfactory  modifications 
having  been  made  therein  at  a  conference  between  the  president 
and  general  solicitor  of  that  company  and  representatives  of  the 
Executive  Committee  of  the  Interstate  Commerce  Law  Convention, 
its  passage  was  subsequently  advocated  by  the  latter  as  a  substitute 
for  the  former;  it  being  understood,  however,  that  the  committee 
mentioned  should  maintain  a  neutral  attitude  in  relation  to  the 
provision  legalizing  pooling  and  authorizing  the  formation  of  traffic 
associations,  on  which  there  is  a  division  of  sentiment  among  the 
commercial  organizations. 

I 

PROVISIONS  OF  THE  PRESENT  BILL,  H.  R.  6273,  CONTAINED  IN 

PREVIOUS  BILLS. 

The  bill  now  before  you,  H.  R.  6273,  'further  to  Define  the 
Duties  and  Powers  of  the  Interstate  Commerce  Commission,"  com- 
prises the  provisions  of  the  Elkins  Bill,  revised  as  above  stated, 
with  the  exception  of  the  pooling  and  traffic  association  provision, 
which  has  been  omitted.  The  clause  limiting  the  operation  of  an 
order  of  the  Commission  to  a  period  of  one  year  has  also  been 
eliminated,  and  a  clause  has  been  substituted  providing  that  an  or- 
der may  at  any  time  be  modified,  suspended  or  revoked  by  the  Com- 
mission upon  full  hearing  of  all  parties  in  interest.  All  the  pro- 
visions contained  in  the  present  bill  were  contained  in  each  of  the 
several  bills  heretofore  mentioned. 


O 


I  would  respectfully  call  the  attention  of  your  honorable  com- 
mittee to  the  fact  that  each  of  the  provisions  in  this  bill  coincide 
with  the  recommendations  for  legislation  amending  the  Interstate 
Commerce  Act  made  by  the  Industrial  Commission  in  its  report  to 
Congress,  which  was  submitted  in  February,  1902,  and  was  signed 
by  seventeen  of  the  eighteen  members  of  that  Commission.    It  does 
not,  however,  comprise  all  of  the  recommendations  made  by  that 
Commission,  it  having  been  deemed  best  by  this  committee  to  re- 
strict the  bill  to  such  provisions  as  in  its  judgment  are  absolutely 
essential  for   giving  effectiveness  to  the  primary  requirement  of 
the  ''Act  to  Regulate  Commerce,"  namely,  that  "all  charges  made 
for  any  service  rendered  or  to  be  rendered  in  the  transportation  of 
passengers  or  property,  or  in  connection  therewith,  shall  be  reason- 
able and  just;"  the  only  means  for  the  enforcement  of  which,  in 
the  present  state  of  the  law,  being  a  provision  that  the  Interstate 
Commerce    Commission    shall    notify  any   common   carrier  found 
guilty  of  a  violation  of  any  of  the  provisions  of  the  Act  "to  cease 
and  desist  from  such  violation,"  leaving  the  carrier  entirely  free  to 
mak$  such  modification  in  the  rate  or  practice  found  to  be  unjust 
or  unreasonable,  as  it  mav  see  fit. 

PROVISIONS  OF  THE  BILL  CONCISELY  STATED. 

The  provisions  of  the  bill  before  you,  concisely  stated,  are  as 
follows: 

(1)  That  the  Interstate  Comnierce  Commission  be  empowered 
to  determine  what  rate,  regulation  or  practice  shall  be  substituted 
for  any  existing  rate  for  the  transportation  of  persons  or  property, 
or  any  regulation  or  practice  affecting  such  rate,  found,  upon  full 
hearing  had  on  any  petition  presented  pursuant  to  the  provisions 
of  the  "Act  to  Regulate  Commerce,"  to  be  unjust,  discriminative 
or  unreasonable;  the  order  requiring  such  substitution  to  become 
operative  within  thirty  days  after  notice,  or,  in  case  of  proceeding 
for  review,  then  within  sixty  days  after  notice.  Such  order  may  at 
any  time  be  modified,  suspended  or  revoked  by  the  Commission  upon 
full  hearing  of  all  parties  in  interest. 

(2)  In  case  of  disagreement  between  carriers,  parties  to  a 
joint  rate  so  substituted,  upon  the  apportionment  thereof,  the  Com- 
mission is  empow^ered  to  determine  the  portion  of  such  rate  to  be 
received  by  each.  In  case  of  an  order  prescribing  the  just  relation 
of  ra,tes  to  or  from  common  points  on  joint  lines,  and  the  several 
carriers  fail  to  agree  as  to  the  changes  to  be  made  to  produce  the 
relation  prescribed,  the  Commission  is  empowered  to  determine  the 
rates  to  be  charged  to  and  from  such  common  points  to  produce 
that  relation. 

(3)  Every  order  as  to  its  justness,  reasonableness  and  lawful- 
ness, is  reviewable  by  any  Circuit  Court  of  the  United  States  hav- 
ing jurisdiction.  If,  after  hearing,  the  Court  shall  be  of  the  opinion 
that  the  order  is  made  under  some  error  of  law,  or  is,  upon  the 
facts,  unjust  or  unreasonable,  it  shall  modify,  set  aside  or  annul 
the  order.  Pending  review,  the  court  may,  upon  application  and 
hearing,  if  in  its  opinion  the  order  is  clearly  unlawful  or  erroneous, 


suspend  such  order.  Any  party  to  the  case  may,  within  thirty 
days  after  the  rendition  of  a  final  decree  of  such  court,  appeal  to 
the  Supreme  Court,  but  the  order  of  the  Circuit  Court  shall  not  be 
stayed  or  suspended  .thereby. 

(4)  In  case  any  party  shall  refuse  or  neglect  to  obey  or  per- 
form any  order  of  the  Commission,  obedience  and  performance 
thereof  shall  be  summarily  enforced  by  writ  of  injunction  or  other 
proper  process,  and  in  addition  thereto  the  offending  party  shall 
be  subject  to  a  fine  of  |5,000  for  each  day's  continuance  of  such 
violation. 

WEAKNESS  OF  THE  PRESENT  LAW. 

The  weakness  of  the  present  law,  under  the  interpretation  of 
the  vSupreme  Court,  lies  in  the  fact  that  the  authority  of  the  Com- 
mission is  limited  to  the  determination  of  the  fact  whether  or  not 
a  rate  complained  of  is  just  and  reasonable,  the  Commission  having 
no  authority  to  determine  what  would  be  a  just  and  reasonable  ratc^ 
in  the  case  before  it.  This  is  fitly  characterized  in  a  recent  maga- 
zine article  contributed  by  a  prominent  member  of  the  House  of 
Representatives,  as  "child's  play,"  and  he  similarly  characterizes 
the  maintaining  of  a  rate  decided  to  be  excessive  by  the  Interstate 
Commerce  Commission  during  the  pendency  of  litigation  instigated 
by  the  carrier. 

AMENDMENT   RECOMMENDED  BY   THE  INTERSTATE 
COMMERCE  COMMISSION. 

In  its  annual  report  to  Congress  submitted  December  6th,  1897, 
immediately  following  the  decision  of  the  Supreme  Court  in  which 
the  above  interpretation  was  announced,  the  Interstate  Commerce 
Commission,  in  the  performance  of  the  duty  enjoined  upon  it  in 
the  twenty-first  section  of  the  "Act  to  Regulate  Commerce,"  to  in- 
clude in  its  report  "such  recommendations  as  to  additional  legisla- 
tion relating  to  the  regulation  of  commerce  as  the  commission  may 
deem  necessary,"  recommended  among  others  the  following  amend- 
ment to  the  act,  namely: 

"If  after  full  hearing,  it  is  determined  that  any  carrier  is  in 
violation  of  the  provisions  of  this  act,  the  Commission  shall  make 
an  order  directing  such  carrier  to  cease  and  desist  from  such  fur 
ther  violation,  and  shall  prescribe  in  such  order  the  thing  which  the 
carrier  is  required  to  do  or  not  to  do  for  the  future  to  bring  itself 
into  conformity  with  the  provisions  of  this  act;  and  in  so  doing  it 
shall  have  power  (a)  to  fix  a  maximum  rate  covering  the  entire  cost 
of  the  service,  (b)  to  fix  both  a  maximum  and  minimum  rate  when 
that  may  be  necessary  to  prevent  discrimination  under  the  third 
section,  (c)  to  determine  the  divisions  between  carriers  of  a"  joint 
rate  and  the  terms  and  conditions  under  which  business  shall  be 
interchanged,  when  that  is  necessary  to  an  execution  of  the  pro- 
visions of  this  act,  (d)  to  make  changes  in  classification,  (e)  to  so 
amend  the  rules  and  regulations  under  which  traffic  moves  as  to 
bring  them  into  conformity  with  the  provisions  of  this  act." 


This  recommendation  was  renewed  by  the  Commission  in  its 
next  succeeding  annual  report,  and  has  been  reiterated  in  subse- 
quent reports,  but  without  effect. 

CONTINUOUS  EFFORT  TO  SECURE  AMENDMENT  OF  THE  LAW. 

Numerous  commercial  organizations  of  the  country  have  been 
making  continuous  effort  during  the  sessions  of  the  56th  and  57th 
Congresses  to  secure  legislation  amending  the  present  law  on  simi- 
lar lines,  as  laid  down  in  the  bill  now  before  your  honorable  com- 
mittee. The  number  of  organizations  participating  in  the  effort 
has  been  increasing  from  year  to  year,  and  is  now  over  two  hundred 
(440  on  December  1,  1904),  thirty-five  (now  sixty)  of  which  are 
national  and  sectional  organizations,  and  one  hundred  and  seventy 
(now  380)  state  and  local,  located  in  thirty  (now  forty-four)  differ- 
ent states,  representing  various  branches  of  trade  and  manufac- 
tures, including  grain,  flour,  hay,  live  stock,  fruit,  cotton,  tobacco, 
dairy  products,  lumber,  leather,  and  merchandise  of  various  kinds, 
petitions  from  which  have  been  presented  to  Congress  at  its  suc- 
cessive sessions  during  the  past  five  years  praying  for  such  legisla- 
tion. The  National  Grange  of  the  Patrons  of  Husbandry,  with  a 
membership  of  over  500,000  farmers,  together  with  seventeen  in- 
dividual State  Granges,  have  petitioned  Congress  for  this  legisla- 
tion. The  Legislatures  of  the  following  States  have  also  petitioned 
Congress  during  the  past  two  years  for  the  enactment  of  legislation 
of  this  character,  namely:  Iowa,  Kansas,  Louisiana,  Michigan, 
Minnesota,  Missouri,  South  Dakota  and  Wisconsin. 

The  Executive  Committee  of  the  Interstate  Commerce  Law 
Convention  acting  in  behalf  of  the  various  commercial  organiza- 
tions referred  to,  again  appears  before  you  to  urge  further  consid- 
eration of  the  subject  by  your  honorable  committee,  and  the  re- 
porting to  the  House  of  Representatives,  with  or  without  recom- 
mendation for  its  passage,  of  the  bill  above  referred  to,  or  some 
other  that  in  its  judgment  may  be  better  calculated  to  give  vitality 
to  the  requirements  of  the  existing  "Act  to  Regulate  Commerce." 
It  is  the  conviction  of  the  committee  mentioned  that  the  legislation 
which  has  been  pressed  for  so  many  years  upon  the  attention  of 
Congress,  should  be  laid  before  the  respective  houses  for  their  con- 
sideration, and  the  matter  brought  to  a  definite  conclusion,  without 
the  commercial  interests  being  subjected  to  the  necessity  of  further 
protracted  effort  to  secure  action  in  relation  thereto. 

THE   NECESSITY    OF   THE    PROPOSED   AMENDMENT    OF    THE 

LAW. 

What  the  commercial  interest  desires  is  not  the  means  of  re- 
covering from  carriers  any  excess  charged  beyond  a  reasonable  rate, 
but  the  prompt  discontinuance  of  a  rate  found  to  be  unjust  or  un- 
reasonable, and  the  substitution  therefor  of  one  that  in  the  judg- 
ment of  a  disinterested  and  expert  administrative  body  would  be 
equitable  to  all  i>arties  concerned,  and  reasonable  in  itself,  for 
future  application.  The  Supreme  Court  of  the  United  States  has 
declared  that  the  fixing  of  a  rate  for  the  future  is  not  a  judicial  func- 


tion,  but  is  a  legislative  one,  and  can  be  constitutionally  exercised 
only  by  a  legislative  body,  or  by  an  administrative  body  to  which 
it  may  be  delegated  by  legislative  authority.  Upon  the  equity  of 
the  established  rates  which  are  continuously  in  force  for  the  trans- 
portation of  property  depends  the  commercial  prosperity  of  every 
locality  and  the  relative  productiveness  of  every  section  of  the 
country;  and  upon  the  reasonableness  of  the  rates  charged  depends 
the  amount  of  the  tribute  levied  upon  the  producers  and  consumers 
of  the  country  for  the  maintenance  and  operation  of  the  means  of 
transportation  employed,  together  with  such  return  upon  the  capi- 
tal invested  therein  as  the  carrier  may  be  justly  entitled  to.  It 
would  seem  to  be  the  duty  of  the  government  to  provide  adequate 
protection  to  the  public  against  the  continuance  of  rates  that  are 
inequitable  as  between  different  sections  and  localities,  or  between 
different  descriptions  of  traffic,  and  also  against  the  exaction  of 
greater  charges  for  the  service  rendered  than  may  be  necessary  to 
produce  a  suitable  return  upon  the  capital  invested. 

The  futility  of  the  means  provided  by  law  for  the  recovery  of 
excessive  freight  charges  .collected  by  common  carriers  is  fully 
demonstrated  by  the  fact  stated  by  Commissioners  Clements  and 
Fifer,  of  the  Interstate  Commerce!  Commission,  at  the  hearings  be- 
fore your  honorable  committee  in  April,  1902,  that  there  is  no 
recorded  case  in  any  federal  court  in  which  a  dollar  has  ever  been 
recovered  by  any  one  on  account  of  having  been  charged  an  un- 
reasonable freight  rate. 

The  comparative  unimportance  of  recovering  damages  in  cases 
in  which  excessive  rates  have  been  charged  is  shown  by  the  follow- 
ing statement  made  in  the  eleventh  annual  report  to  Congress  of 
the  Interstate  Commerce  Commission,  previously  referred  to: 

''Since  its  existence  the  Commission  has  entertained  in  all  two 
hundred  and  twenty-five  formal  complaints  in  which  a  reduction 
was  either  ordered  by  the  Commission,  or  agreed  to  by  the  carrier 
in  compromise  of  the  proceeding.  The  excesses  which  shippers  had 
paid  over  and  above  the  revised  rate  in  these  cases  must  have 
amounted  to  hundreds  of  thousands  of  dollars.  In  every  case — cer- 
tainly in  every  case  where  a  formal  order  was  made — the  shipper 
might  have  obtained  an  order  for  reparation,  had  he  applied  for  it 
and  showed  proof  of  the  amount  of  his  shipments,  and  yet  in  only 
five  of  these  cases  was  any  reparation  ordered;  and,  with  the  ex- 
ception of  two  cases,  the  amount  did  not  exceed  flOO  in  any  case. 
This  shows  how  insignificant  to  the  mind  of  the  people  who  are 
suffering  and  complain,  is  the  mere  right  to  recover  a  portion  of  the 
freight." 

It  is  the  regulation  of  the  rate  to  be  charged  for  the  future 
that  is  of  vital  importance,  both  to  the  commercial  interest,  and  to 
the  interest  of  the  public  at  large.  In  point  of  fact,  the  grea.t  bulk 
of  the  freight  charges  of  the  country  are  paid  by  persons  who  have 
no  direct  interest  in  them,  who  constitute  merely  the  agency 
through  which  the  carriers  collect  their  charges,  and  who  add  such 
charges  to  the  cost  of  the  commodities  dealt  in  by  them,  and  pass 
them  along  in  the  price  of  the  commodities,  and  they  finally  fall 
upon  the  consumer,  who  has  no  standing  iij  court  for  the  recovery 


of  any  part  thereof;  or,  as  in  tlie  case  of  agricultural  products,  the 
value  thereof  at  the  place  of  production  is  dependent  upon  the 
freight  charged  therefrom  to  the  nearest  available  market,  which 
is  borne  in  the  outset  by  the  producer,  who  has  no  standing  in  the 
courts,  the  freight  being  paid  to  the  carrier  by  the  dealer  who 
handles  the  property  on  which  it  is  charged.  It  will  be  readily 
seen  that  in  both  cases  the  person  who  pays  the  freight,  who  is  the 
only  one  having  any  legal  claim  against  the  carrier,  has  no  equita- 
ble interest  in  any  excess  that  may  be  charged  beyond  a  reasonable 
rate,  and  that  the  only  protection  to  the  person  upon  whom  the 
charge  for  freight  actually  falls  lies  in  the  proper  regulation  be- 
forehand of  the  rate  to  be  charged. 

All  the  provisions  of  the  bill  now  before  you  were  contained 
in  the  Nelson-Corliss  Bill,  hearings  on  which  were  held  by  your 
honorable  committee  during  the  first  session  of  the  57th  Congress, 
at  which  Chairman  Knapp,  of  the  Interstate  Commerce  Commis- 
sion, said:  "For  ten  years  the  Commission  charged  with  the  ad- 
ministration of  this  law — from  1887  to  1897 — assumed  that  it  had 
authority  to  do  everything  which  this  Corliss  Bill  would  permit 
it  to  do?'  He  adds  in  this  connection  that,  "In  the  first  eight 
months  after  the  Commission  was  organized,  when  one  of  the  most 
eminent  jurists  this  country  ever  produced,  Judge  Cooley,  was  its 
chairman,  the  Commission  made  orders  which  in  principle  and  in 
terms  covered  every  order  which  the  Commission  could  make  under 
this  Corliss  Bill."  During  the  period  that  these  powers  were  exer- 
cised by  the  Commission,  the  right  to  exercise  which  was  not  then 
questioned  by  the  carriers,  no  such  dire  results  followed  as  are 
now  predicted  by  the  opponents  of  the  proposed  legislation;  but, 
on  the  contrary,  it  is  an  acknowledged  fact  that  the  relations  be- 
tween the  carriers  and  the  commercial  interests  of  the  country 
were  more  harmonious  and  mutually  satisfactory  than  at  any  time 
before  or  since. 

EXPERIENCE  OF  TWENTY  STATES  UNDER  THE  EXERCISE  OF 
A  GREATER  POWER  OVER  RATES  THAN  IS  PRO- 
POSED IN  THE  PRESENT  BILL. 

The  power  over  rates,  proposed  to  be  conferred  upon  the  Inter- 
state Commerce  Commission  by  the  bill  before  you,  falls  very  far 
short  of  that  conferred  upon  the  Railway  Commissions  of  twenty 
of  the  States  of  the  Union,  which  has  been  exercised  in  many  of 
those  States  for  periods  varying  from  twenty  to  thirty  years. 

In  each  of  the  twenty  States  referred  to  the  Railway  Commis- 
sions are  empowered  to  fix  rates  primarily,  or  to  prepare  schedules 
of  maximum  rates  for  the  transportation  of  persons  and  property 
wholly  within  their  respective  States.  Commissioner  Clements,  of 
the  Interstate  Commerce  Commission,  in  his  testimony  before  your 
committee  at  the  hearings  previously  mentioned,  referring  to  the 
exercise  of  this  power  by  the  State  Commissions,  said:  "There  are 
only  a  few  cases  where  the  railroads  have  had  occasion  to  resort 
to  the  courts  to  stay  the  rate-making  power  of  the  states  on  the 
ground  that  it  was  unreasonably  and  unjustly  exercised  during  this 
period.    The  building  of  railways  in  these  States  has  been  as  ex- 


8 

tensive  as  in  any  others,  and,  in  fact,  in  many  of  them  much  more 
so,  and  the  operation  of  the  railways  within  these  States  has  been 
as  profitable,  on  an  average,  as  elsewhere  in  the  country.  Some  of 
the  best-paying  railway  systems  of  the  country  lie  wholly  or  chiefly 
within  these  States.  It  would  seem,  in  view  of  the  satisfactory 
results,  for  so  long  a  period  and  in  so  many  States,  of  the  exercise 
of  a  much  greater  power  than  that  proposed  to  be  conferred  upon 
the  Interstate  Commerce  Commission;  and  also  in  view  of  the  fact 
that  the  limited  power  proposed  was  satisfactorily  exercised  by 
that  Commission  during  a  period  of  ten  years  from  its  organization, 
until  the  Supreme  Court  denied  that  the  existing  act  conferred 
such  power;  that  it  would  be  not  only  safe,  but  wise  to  invest  the 
Commission  with  it,  as  contemplated  in  the  bill  before  you. 

It  will  be  observed  from  the  foregoing  that  the  legislation  out- 
lined in  the  bill  before  you  is  sought  by  commercial  and  manufac- 
turing interests  of  every  kind,  and  also  by  the  agricultural  inter- 
ests of  the  country;  that  it  is  recommended  by  the  administrative 
body  of  the  government  charged  with  the  execution  of  the  Inter- 
state Commerce  Law,  and  also  by  the  Industrial  Commission 
created  by  Congress  in  1898  for  the  purpose  of  investigating  the 
Industrial  and  commercial  conditions  of  the  country  and  suggesting 
needed  legislation  in  relation  thereto;  and  that  it  has  been  advo- 
cated, in  combination  with  the  legalizing  of  pooling  and  the  forma- 
tion of  railway  traffic  associations,  by  the  management  of  one  of 
the  most  important  railway  systems  of  the  country. 

The  committee  which  I  have  the  honor  to  represent  therefore 
respectfully  petitions  your  honorable  committee  to  give  the  subject 
such  further  serious  consideration  as  its  importance  seems  to  de- 
mand, with  the  earnest  hope  that  you  will  see  fit  to  report  the  bill 
referred  to,  with  such  emendation  as  in  your  judgment  may  give 
it  greater  effectiveness,  to  the  House  of  Representatives,  at  an 
early  date,  with  a  recommendation  for  its  passage. 

Respectfully  submitted,  E.  P.  BACON, 

CHAIRMAN,  EXECUTIVE  COMMITTEE, 
INTERSTATE   COMMERCE   LAW    CONVENTION. 

Milwaukee,  Wis.,  January  30th,  1904. 


THE  COOPER-QUARLES  BILL. 

H.  R.  6273,  introduced  by  Representative  H.  A.  Cooper,  De- 
cember 8,  1903,  and  referred  to  the  House  Committee  on  Interstate 
and  Foreign  Commerce,  which  is  constituted  as  follows: 

Republicans. — W.  P.  Hepburn,  of  Iowa,  chairman;  J.  S.  Sher 
man,  of  New  York;  I.  P.  Wanger,  of  Pennsylvania;  J.  R.  Mann,  of 
Illinois;  W.  C.  Lovering,  of  Massachusetts;  F.  C.  Stevens,  of  Minne- 
sota; C.  H,  Burke,  of  South  Dakota;  J.  J.  Esch,  of  Wisconsin;  F. 
W.  Cushman,  of  Washington;  T.  B.  Kyle,  of  Ohio;  C.  E.  Townsend, 
of  Michigan. 

Democrats. — R.  C.  Davey,  of  Louisiana;  W.  C.  Adamson,  of 
Georgia;  D.  W.  Shakleford,  of  Missouri;  W.  H.  Ryan,  of  New  York; 
William  Richardson,  of  Alabama;  W.  B.  Lamar,  of  Florida. 


S.  2439,  introduced  by  Senator  J.  V.  Quarles,  December  12, 
1903,  and  referred  to  the  Senate  Committee  on  Insterstate  Com- 
merce, which  is  constituted  as  follows: 

Republicans. — S.  B.  Elkins,  of  West  Virginia,  chairman;  S.  M. 
Cullom,  of  Illinois;  N.  W.  Aldrich,  of  Rhode  Island;  John  Kean,  of 
New  Jersey;  J.  P.  Dolliver,  of  Iowa;  J.  B.  Foraker,  of  Ohio;  M.  E. 
Clapp,  of  Minnesota;  J.  H.  Millard,  of  Nebraska. 

Democrats. — B.  R.  Tillman,  of  South  Carolina;  A.  J.  McLaurin, 
of  Mississippi;  E.  W.  Carmack,  of  Tennessee;  M.  J.  Foster,  of 
Louisiana;  F.  G.  Newlands,  of  Nevada. 

The  House  and  Senate  bills  are  identical,  and  read  as  follows: 

A  BILL  FURTHER  TO  DEFINE  THE  DUTIES  AND  POWERS  OF 
THE  INTERSTATE  COMMERCE  COMMISSION. 

Be  it  enacted  by  the  Senate  and  House  of  Representatives  of  the 
United  States  of  America  in  Congress  assembled,  That  any  order  made 
by  the  Interstate  Commerce  Commission,  after  hearing  and  de- 
termination had  on  any  petition  now  pending  or  hereafter  pre- 
sented, pursuant  to  section  thirteen  of  an  act  entitled  "An  act  to 
regulate  commerce,"  approved  February  fourth,  eighteen  hundred 
and  eighty-seven,  declaring  any  existing  rate  or  rates  in  said  peti- 
tion complained  of  for  the  transportation  of  persons  or  property  or 
any  regulation  or  practice  affecting  such  rates,  or  facilities  afforded 
in  connection  therewith,  to  be  unjustly  discriminating  or  unreason- 
able, and  declaring  what  rate  or  rates,  regulation,  or  practice  affect- 
ing such  rate  or  rates  would  be  just  and  reasonable,  and  requiring 
them  to  be  substituted  therefor,  shall  become  operative  and  be  ob- 
served by  the  party  or  parties  against  whom  the  same  shall  be  made 
within  thirty  days  after  notice,  or,  in  case  of  proceedings  for  re- 
view, as  hereinafter  provided,  then  within  sixty  days  after  notice; 
but  such  order  may  at  any  time  be  modified,  suspended,  or  revoked 
by  the  Commission  upon  full  hearing  of  all  parties  in  interest. 

Sec.  2.  That  when  the  rate  substituted  by  the  Commission  as 
hereinbefore  provided  is  a  joint  rate,  and    the    carriers,  parties 


10 

thereto,  fail  to  agree  upon  the  apportionment  thereof  among  them- 
selves within  twenty  days  after  notice  of  such  order,  the  Commis- 
sion may  issue  a  supplemental  order  declaring  the  portion  of  such 
joint  rate  to  be  received  by  each  carrier  party  thereto,  which  order 
shall  be  observed  by  such  carriers.  When  the  order  of  the  Com- 
mission prescribes  the  just  relation  of  rates  to  or  from  common 
points  on  the  lines  of  the  several  carriers  parties  to  the  proceeding, 
and  such  carriers  fail  to  notify  the  Commission  within  twenty  days 
after  notice  of  such  order  that  they  have  agreed  among  themselves 
as  to  the  changes  to  be  made  to  effect  compliance  therewith,  the 
Commission  may  issue  a  supplemental  order  prescribing  the  rates 
to  be  charged  to  or  from  such  common  points  by  either  or  all  of 
the  parties  to  the  proceeding,  which  order  shall  be  observed  by  the 
carriers  concerned. 

Sec.  3.  That  every  order,  as  to  its  justness,  reasonableness, 
and  lawfulness,  shall  be  reviewable  by  any  circuit  court  of  the 
United  States  for  any  district  through  which  any  portion  of  the 
road  of  any  carrier  named  in  such  order  shall  run,  to  which  a  peti- 
tion filed  on  its  equity  side,  within  twenty  days  from  the  service  of 
such  order,  shall  be  first  presented  by  any  party  interested.  It 
shall  be  the  duty  of  the  Commission,  within  twenty  days  after 
notice,  to  cause  to  be  filed  in  any  court  to  which  such  petition  shall 
have  been  so  presented  a  duly  certified  copy  of  its  entire  record  in 
connection  with  the  order  to  be  reviewed,  including  petition,  an- 
swers, testimony,  report  and  opinion  of  the  Commission,  its  order, 
and  all  other  papers  whatsoever  in  connection  therewith.  The 
court  shall  thereupon  proceed  to  hear  the  same  upon  petition, 
record,  and  testimony  returned  by  the  Commission;  or,  in  its  dis- 
cretion, may,  upon  the  application  of  either  party  and  in  such  man- 
ner as  it  shall  direct,  cause  additional  testimony  to  be  taken;  and 
thereupon  if,  after  hearing,  said  court  shall  be  of  the  opinion  that 
said  order  was  made  under  some  error  of  law,  or  is,  upon  the  facts, 
unjust  or  unreasonable,  it  shall  modify,  set  aside,  or  annul  the 
same  by  appropriate  decree;  otherwise  the  petition  shall  be  dis- 
missed. Pending  such  review,  however,  the  court  may,  upon  appli- 
cation and  hearing,  if  in  its  opinion  the  order  is  clearly  unlawful 
or  erroneous,  suspend  said  order.  Any  party  to  the  cause  may, 
within  thirty  days  of  the  rendition  of  any  final  decree  of  said  court, 
appeal  to  the  Supreme  Court  of  the  United  States,  which  court 
shall  proceed  to  hear  and  determine  such  appeal.  But  neither  the 
order  of  the  circut  court  nor  the  execution  of  any  writ  or  process 
thereon  shall  be  stayed  or  suspended  during  the  pendency  of  such 
appeal.  The  said  several  courts  of  the  United  States  shall  be  and 
are  vested  with  full  jurisdiction  and  all  necessary  powers  in  the 
premises.  The  case  in  both  the  circuit  court  and  the  Supreme 
Court  shall  have  precedence  over  all  except  criminal  cases. 

Sec.  4.  That  the  defense  in  all  such  proceedings  for  review 
shall  be  undertaken  by  the  United  States  district  attorney  for  the 
district  wherein  the  action  is  brought,  under  the  direction  of  the 
Attorney  General  of  the  United  States,  and  the  costs  and  expenses 
of  such  defense  shall  be  paid  out  of  the  appropriation  for  the  ex- 
penses   of    the    courts    of    the    United    States.      The    Commission 


11 

may,  with  the  consent  of  the  Attorney  General,  employ  special 
counsel  in  any  proceedings  under  this  act,  paying  the  expense  of 
such  employment  out  of  its  own  appropriation. 

Sec.  5.  That  if  any  party  bound  thereby  shall  refuse  or  neglect 
to  obey  or  perform  any  order  of  the  Commission  mentioned  in  sec- 
tion one  of  this  act  at  any  time  while  the  same  is  in  force,  obedience 
and  performance  thereof  shall  be  summarily  enforced  by  writ  of  in- 
junction or  other  proper  process,  mandatory  or  otherwise,  which 
shall  be  issued  by  any  circuit  court  of  the  United  States  upon  peti- 
tion of  said  Commission  or  of  any  party  interested,  accompanied  by 
a  certified  copy  of  the  order  alleged  to  be  violated  and  evidence  of 
the  violation  alleged,  and  in  addition  thereto  the  offending  party 
shall  bQ  subject  to  a  penalty  of  five  thousand  dollars  for  each  day 
of  the  continuance  of  such  violation,  which,  together  with  costs  of 
suit,  shall  be  recoverable  by  said  Commission  by  action  of  debt 
in  any  circuit  court  of  the  United  States,  and  when  so  recovered 
shall  be  for  the  use  of  the  United  States, 

Sec.  6.  That  all  acts  or  parts  of  acts  in  conflict  with  the  pro- 
visions of  this  act  are  hereby  repealed,  but  such  repeal  shall  not 
affect  causes  now  pending  in  court  nor  rights  which  have  already 
accrued,  but  such  causes  shall  be  prosecuted  to  a  conclusion  and 
such  rights  enforced  in  a  manner  heretofore  provided  by  law.  All 
existing  laws  relative  to  testimony  in  cases  or  proceedings  under 
or  connected  with  the  Act  to  Kegulate  Commerce  shall  also  apply 
to  any  case  or  proceeding  authorized  by  this  act. 

Sec.  7.  That  this  act  shall  take  effect  from  its  passage. 


12 


APPEALS  TO  CONGRESS. 


The  appeals  for  prompt  enactment  by  Congress  of  this  remedial 
legislation  have  been  numerous  and  strong.  Action  has  been  urged 
by  messages  of  the  President  to  Congress,  by  the  report  of  the  Indus- 
trial Commission,  by  reports  of  the  Interstate  Commerce  Commis- 
sion, by  concurrent  resolutions  and  petitions  from  eight  State  Legis- 
latures, by  the  National  Association  of  State  Railway  Commission- 
ers, and  by  resolutions  adopted  by  over  420  of  the  leading  commer- 
cial and  industrial  associations  of  the  United  States,  comprising 
about  1,000,000  shippers  and  receivers  of  freight,  such  as  the  National 
Grange  Patrons  of  Husbandry  and  seventeen  of  its  State  granges, 
the  Grain  Dealers'  National  Association  and  its  numerous  State 
bodies,  the  National  Board  of  Trade,  the  National  Live  Stock  Asso- 
ciation, the  National  Hay  Association,  the  National  League  of  Com- 
mission Merchants,  Millers'  National  Association,  National  organi- 
zations representing  the  Lumber,  Cotton,  Drug,  Hardware,  Grocer3' 
and  other  interests,  and  State  and  local  organizations  in  forty-three 
States  and  Territories. 

The  Congressional  Record,  reporting  the  proceedings  of  the 
first  and  second  sessions  of  the  Fifty-eighth  Congress,  exhibits  the 
fact  that,  during  the  two  sessions  (which  have  passed),  occupying 
the  interval  from  November  9,  1903,  to  April  29,  1904,  on  nearly 
every  day  there  have  been  filed,  with  the  committees  having  the 
measure  in  hand,  petititions  and  memorials  praying  for  the  speedy 
enactment  of  legislation  to  strengthen  the  powers  of  the  Interstate 
Commerce  Commission.  The  record  shows  that  such  documents 
were  received  and  referred  on  ninety-six  different  dates,  submitted 
by  thirty-one  different  Senators  and  seventy-three  different  Repre- 
sentatives, from  116  organizations  of  shippers  and  receivers. 

The  sentiment  favorable  to  effective  regulation  of  interstate 
commerce  has  been  steadily  gaining  strength  during  the  past  eight 
or  ten  years.  In  1806,  before  the  law  had  been  deprived  of  its  vital- 
ity by  the  decision  of  the  Supreme  Court,  President  Cleveland,  in  a 
message  to  Congress,  said:  "The  justice  and  equity  of  the  principles 
embodied  in  the  existing  law  (the  Act  to  Regulate  Commerce), 
passed  for  the  purpose  of  regulating  transportation  charges,  are 
everywhere  conceded,  and  there  appears  to  be  no  question  that  the 
policy  thus  entered  upon  has  a  permanent  place  in  our  legislation." 

President  Roosevelt,  in  a  message  to  the  Fifty-seventh  Con- 
gress, called  attention  to  the  need  of  legislation.  He  stated:  "That 
the  cardinal  provisions  of  the  interstate  commerce  act  were  that 
railway  rates  should  be  just  and  reasonable,  and  that  all  shippers, 
localities  and  commodities  should  be  accorded  equal  treatment." 
That,  "Experience  has  shown  the  wisdom  of  its  purposes,  but  has 
also  shown,  possibly,  that  some  of  its  requirements  are  wrong,  cer- 
tainly that  the  means  devised  for  the  enforcement  of  its  provisions 
are  defective."  He  says,  in  conclusion:  "The  act  should  be  amend- 
ed. The  railway  is  a  public  servant.  Its  rates  should  be  just  to 
and  open  to  all  shippers  alike.     The  government  should  see  to  it 


13 

that  within  its  jurisdiction  this  is  so,  and  should  provide  a  speedy, 
inexpensive  and  effective  remedy  to  that  end.  Nothing  could  be 
more  foolish  than  the  enatcment  of  legislation  which  would  un- 
necessarily interfere  with  the  development  and  operation  of  these 
commercial  agencies.  The  subject  is  one  of  great  importance  and 
calls  for  the  earnest  attention  of  Congress." 

In  his  message  of  December  6th,  1902,  to  the  present  session  of 
Congress,  President  Roosevelt  again  urges  action  in  the  following 
language: 

■  '^Above  all  else,  we  must  strive  to  keep  the  highways  of 
commerce  open  to  all  on  equal  terms;  and  to  do  this  it  is  necessary 
to  put  a  complete  stop  to  all  rebates.  Whether  the  shipper  or  the 
railroad  is  to  blame  makes  no  difference;  the  rebate  must  be 
stopped,  the  abuses  of  the  private  car  and  private  terminal-track 
and  side-track  systems  must  be  stopped,  and  the  legisla- 
tion of  the  Fifty-seventh  Congress  which  declares  it  to 
be  unlawful  for  any  person  or  corporation  to  offer,  grant, 
give,  solicit,  accept  or  receive  any  rebate,  concession  or  dis- 
crimination in  respect  to  the  transportation  of  any  property  in 
interstate  or  foreign  commerce  whereby  such  property  shall  by  any 
device  whatever  be  transported  at  a  less  rate  than  that  named  in 
the  tariffs  published  by  the  carrier  must  be  enforced.  For  some 
time  after  the  enactment  of  the  act  to  regulate  commerce  it  re- 
mained a  mooted  question  whether  that  act  conferred  upon  the  In- 
terstate Commerce  Commission  the  power,  after  it  had  found  a 
challenged  rate  to  be  unreasonable,  to  declare  what  thereafter 
should,  prima  facie,  be  the  reasonable  maximum  rate  for  the  trans- 
portation in  dispute.  The  Supreme  Court  finally  resolved  that  ques- 
tion in  the  negative,  so  that  as  the  law  now  stands  the  commission 
simply  possess  the  bare  power  to  denounce  a  particular  rate  as  un- 
reasonable." 

''While  I  am  of  the  opinion  that  at  present  it  would  be  unde- 
sirable, if  it  were  not  impracticable,  finally  to  clothe  the  commis- 
sion with  general  authority  to  fix  railroad  rates,  I  do  believe  that, 
as  a  fair  security  to  shippers,  the  commission  should  be  vested  ivith  the 
power,  where  a  given  rate  has  been  challenged  and  after  full  hearing 
found  to  he  unreasonable,  to  decide,  subject  to  judicial  review,  what  shall 
be  a  reasonable  rate  to  take  its  place;  the  ruling  of  the  commission  to 
take  effect  immediately,  and  to  obtain  unless  and  until  it  is  reversed  by 
the  court  of  review.  The  government  must  in  increasing  degree  su- 
pervise and  regulate  the  workings  of  the  railways  engaged  in  inter- 
state commerce;  and  such  increased  supervision  is  the  only  alter- 
native to  an  increase  of  the  present  evils  on  the  one  hand  or  a  still 
more  radical  policy  on  the  other.  IN  MY  JUDGMENT  THE  MOST 
IMPORTANT  LEGISLATIVE  ACT  NOW  NEEDED  AS  RE- 
GARDS THE  REGULATION  OF  CORPORATIONS  IS  THIS  ACT 
TO  CONFER  ON  THE  INTERSTATE  COMMERCE  COMMIS- 
SION THE  POWER  TO  REVISE  RATES  AND  REGULATIONS, 
THE  REVISED  RATE  TO  AT  ONCE  GO  INTO  EFFECT,  AND 
TO  STAY  IN  EFFECT  UNLESS  AND  UNTIL  THE  COURT  OF 
REVIEW  REVERSES  IT." 


14 

"Steamship  companies  engaged  in  interstate  commerce  and  pro- 
tected in  our  coastwise  trade  should  be  held  to  a  strict  observance 
of  the  interstate  commerce  act." 

THE  INDUSTRIAL  COMMISSION. 

The  Industrial  Commission  of  the  United  States,  a  body  ap- 
pointed by  the  President,  pursuant  to  a  resolution  of  Congress, 
composed  of  four  members  of  the  Senate,  four  members  of  the 
House  of  Representatives  and  ten  prominent  citizens,  charged  with 
the  duty  of  investigating  and  reporting  upon  the  industrial  condi- 
tions of  the  country,  after  between  three  and  four  years  of  exhaus- 
tive investigation,  in  its  report  to  Congress,  in  February,  1902, 
said: 

"No  denial  whatever  of  the  arbitrary  and  enormous  power 
which  the  right  to  make  freight  rates  imposes  can  be  entertained 
for  a  moment.  A  pertinent  question,  however,  is  as  to  whether  the 
exercise  of  such  power  by  irresponsible  railroad  managers,  as  at 
present,  is  reasonable.  If,  according  to  the  statement  of  the  rail- 
road interests  themselves,  the  power  to  make  freight  rates  involves 
the  right  to  make  or  break  men,  industries,  and  even  the  prosperity 
of  the  entire  States,  how  great  is  the  necessity  for  adequate  super- 
vision, subject  to  appeal  to  the  courts.  This  is  apparently  recog- 
nized by  the  more  conservative  representatives  of  the  carriers  them- 
selves, as  evidenced  by  testimony  before  the  Industrial  Commission. 

"Under  the  circumstances  at  present  prevalent  this  arbitrary 
power  is  exercised  by  one  party,  namely,  the  traffic  managers  of  the 
railroads  in  Interest,  without  any  appeal  whatever.  *  *  *  As 
against  the  claim  that  the  exercise  by  the  commission  of  the  right 
to  prescribe  rates  involves  the  transfer  of  all  rate-making  power  for 
the  roads  of  the  country  to  an  administrative  commission,  it  may 
be  urged  that  during  the  ten  years  that  this  power  was  supposed 
to  exist  no  such  revolutionary  effect  was  discernible.  So  long  as 
the  commission  is  restricted  to  issuing  orders  only  upon  complaint 
and  after  investigation,  it  is  scarcely  to  be  said  that  the  roads  will 
be  deprived  of  their  right  to  promulgate  rates  in  first  instance  for 
themselves.     *     *     * 

"The  burden  of  complaint  is  at  the  present  time  that  the  rail- 
roads are  the  sole  arbiters  as  to  reasonable  rates,  and  it  seems  illogi- 
cal, therefore,  however  expedient  as  a  matter  of  policy  it  may  be 
for  them,  to  allege  the  injustice  of  such  a  situation  as  a  ground  for 
objection  to  conferring  rate-making  supervision  upon  a  government 
commission." 

"To  the  end  that  discrimination  and  inequality  as  between  ship- 
pers, and  maladjustment  of  freight  rates  between  competing  mar- 
kets and  trade  centers  may  be  abolished  or  minimized;  that  the  pub- 
lic may  be  assured  of  reasonable  and  stable  freight  rates,  which  will 
at  the  same  time  afford  fair  returns  upon  capital  invested,  etc.,  we 
recommend : 

"The  definite  grant  of  power  to  the  Interstate  Commerce  Com- 
mission, never  on  its  own  initiative,  but  only  on  formal  complaint, 
to  pass  upon  the  reasonableness  of  freight  and  passenger  rates  or 


15       . 

charges;  also  the  definite  grant  of  power  to  declare  given  rates  un- 
reasonable, as  at  present,  together  with  power  to  prescribe  reason- 
able rates  in  substitution. 

"Appeal  from  an  administrative  order  of  the  commission  should 
not  vacate  or  suspend  an  order  unless  it  plainly  appears  that  such 
order  proceeds  upon  some  error  of  law  or  is  unjust  or  unreasonable 
on  the  facts,  in  which  case,  and  not  otherwise,  the  court  may  sus- 
pend its  operation  during  the  pendency  of  proceedings  in  review. 
All  findings  of  fact  by  the  commission,  when  properly  certified, 
should  be  received  as  prima  facie  evidence  in  subsequent  proceed- 
ings in  the  case.  New  testimony  offered  by  either  party,  when  U 
appears  that  such  testimony  is  material  and  could  not  have  been 
taken  in  the  first  instance,  should  be  taken  by  the  Interstate  Com- 
merce Commission  on  order  from  the  court.  The  time  in  which  an 
appeal  to  the  Supreme  Court  of  the  United  States  may  be  taken 
should  be  limited  to  thirty  days,  but  such  appeal  should  not  vacate 
or  suspend  the  order  appealed  from." 

"It  is  incontestable  that  many  of  the  great  industrial  combina- 
tions had  their  origin  in  railroad  discriminations." 

"A  great  change  in  the  status  and  powers  of  the  Interstate 
Commerce  Commission  has  taken  place  since  its  institution  in 
1887.  The  decisions  of  judicial  tribunals  have  greatly  modified  and, 
in  general,  reduced  the  powers  and  functions  which  this  commission 
was  at  first  supposed  to  possess." 

"We  recommend  that  the  authority  of  the  Interstate  Commerce 
Commission,  necessary  for  the  adequate  protection  of  shippers  ami 
clearly  intended  by  the  framers  of  the  law,  be  restored  and  that  the 
powers  and  functions  of  the  commission  be  enlarged." 

And,  further,  with  relation  to  the  Supreme  Court  decision  of 
1897,  denying  power  of  the  commission  to  prescribe  rates: 

"The  immediate  effect  of  this  decision  was  to  prevent  any  en- 
forcement of  orders  relative  to  rates  by  the  commission.  The  car 
riers  immediately  refused  to  obey  any  orders  which  the  commis- 
sion issued  for  the  redress  of  grievances.  This  policy  has  been  man- 
ifested with  increasing  clearness  during  the  five  years  subsequent 
to  the  decision.  It  has  become  more  and  more  certain  that  the  de- 
nial of  the  right,  not  only  to  pass  upon  the  reasonableness  of  a  par- 
ticular rate,  but  to  prescribe  what  rate  should  supersede  it,  means 
the  abolition  of  all  control  whatever.  The  entire  inadequacy  of 
making  rate  regulations  dependent  upon  the  mere  determination  of 
rates  as  applied  in  the  past  without  reference  to  rates  which  shall 
prevail  in  the  future  is  apparent  on  all  sides.  More  than  this,  all 
remedy  for  the  parties  who  have  borne  the  burden  of  an  unreason- 
able rate  would  seem  to  have  been  removed.  *  *  *  Experience 
shows  that  almost  no  shippers  or  other  parties  injured  actually  at- 
tempt to  secure  the  restitution  of  moneys  already  paid  for  unreason- 
able charges.  In  only  five  out  of  225  cases  down  to  1897  was  a  re- 
bate (or  refund)  actually  sought,  and  in  these  cases  flOO  was  the 
maximum  sought  to  be  covered.  As  a  matter  of  fact,  the  damage 
inflicted  by  the  existence  of  an  unreasonable  rate  could  not  be  meas- 
ured by  hundreds  or  perhaps  by  hundreds  of  thousands  of  dollars. 
The  bearing  of  this  citation  is  to  show  that  any  effectual  protection 


16 

to  the  shipper  must  proceed  from  adjudication  of  the  reasonableness 
of  rates  before  and  not  after  they  rave  been  paid;  that  is  to  say, 
in  advance  of  their  exaction  by  the  carrier.  Power  to  pass  upon 
the  reasonableness  of  such  rates  prior  to  their  enforcement  as  a  con- 
sequence constitutes  practically  the  only  safeguard  which  the  ship- 
jjing  public  may  enjoy." 

STATE  LEGISLATURES. 

The  State  Legislature  of  Michigan,  by  concurrent  resolution, 
appealed  to  Congress  to  amend  the  law  "so  as  to  enable  the  Inter- 
state Commerce  Commission  to  put  into  full  force  and  effect  its 
rulings  and  decisions." 

The  State  Legislature  of  Wisconsin,  by  concurrent  resolution, 
petitioned  Congress  to  "speedily  amend  the  act,"  and  requested  the 
Senators  and  Representatives  of  that  State  "to  co-operate  in  pro- 
moting the  passage  of  the  measure  to  that  end." 

The  State  Legislature  of  South  Dakota,  by  concurrent  resolu- 
tion, memorialized  Congress,  urging  prompt  amendment  of  the  act 
"authorizing  and  empowering  the  commission  to  fix  reasonable  and 
just  rates,  and  also  adequate  and  well-defined  procedure  for  the 
proper  enforcement  and  carrying  into  effect  its  decisions  and  orders. 
This  enlargement  of  the  statute  is  imperatively  needed  to  give  the 
law  efficiency,  so  that  the  objects  and  benefits  originally  designed 
may  be  fully  secured  to  the  people." 

The  Kansas  State  Legislature,  by  concurrent  resolution,  peti- 
tioned Congress  "to  amend  the  act  so  as  to  enlarge  the  powers  of 
the  Interstate  Commerce  Commission  and  give  to  it  authority  to 
prevent  unjust  discriminations  in  the  interstate  carrying  trade." 

The  State  Legislature  of  Louisiana,  by  concurrent  resolution, 
appealed  to  Congress  to  amend  the  law,  requesting  the  Senators 
and  Representatives  "to  urge  upon  Congress  the  passage  of  amend- 
ments defining  with  more  precision  the  powers  and  duties  of  the 
commission." 

Similar  action  has  been  taken  by  the  State  Legislatures  of 
Iowa,  Minnesota  and  Missouri. 

STATE  R.  R.  COMMISSIONERS. 

The  National  Association  of  State  Railroad  Commissioners,  in 
convention  at  San  Francisco,  June  5,  1901,  by  resolution,  appealed 
to  Congress  to  amend  the  act,  saying:  "Congress  is  earnestly  urged 
to  the  prompt  enactment  of  legislation  to  clothe  the  Interstate  Com- 
merce Commission  with  power  and  authority  to  fix  charges  when 
its  judgments  need  to  be  so  perfected. 

Again,  in  convention  at  Charleston,  South  Carolina,  February 
15,  1902,  the  organization  reiterated  its  appeal  in  forceful  language. 

THE  NATIONAL  GRANGE,  P.  OF  H. 

The  National  Grange,  Patrons  of  Husbandry,  in  annual  conven- 
tion, adopted  a  resolution,  saying:  "We  furnish  nearly  sixty  per 


17 

cent  of  -all  freight  carried  by  the  railroads  of  this  country."  "We 
believe  that  the  commission  has  tried  to  carry  out  the  act,  but  by 
virtue  of  judicial  decisions  it  has  ceased  to  be  a  body  for  the  regu- 
lation of  interstate  carriers."  "We  approve  the  recommendation  as 
to  enlarging  the  powers  and  duties  of  the  commission,  giving  it  and 
charging  it  with  the  duty  of  fixing  maximum  rates." 

Similar  action  in  support  of  the  expression  of  this  national  body 
has  been  taken  by  its  State  granges  in  Connecticut,  Illinois,  Iowa, 
Indiana,  Kansas,  Massachusetts,  Michigan,  New  York,  New  Hamp- 
shire, New  Jersey,  Ohio,  Pennsylvania,  Rhode  Island,  Vermont, 
Washington.  Wisconsin  and  other  States. 

THE  INTERSTATE  COMMERCE  LAW  CONVENTION. 

The  Interstate  Commerce  Law  Convention,  held  at  St.  Louis, 
Missouri,  October  28  and  29,  1904:,  composed  of  306  delegates  from 
169  associations,  32  of  which  were  national  and  sectional  (the  latter 
comprising  groups  of  States)  and  137  State  and  local  in  character, 
located  in  28  States  and  Territories,  adopted  the  following  petition: 

To  the  Congress  of  the  United  States: 

The  undersigned  commercial,  mercantile,  manufacturing  and 
agricultural  organizations,  embracing  various  branches  of  trade 
and  industry  throughout  the  LTnited  States,  duly  authorized  dele- 
gates from  which  assembled  in  Convention  in  the  city  of  St.  Louis, 
Mo.,  on  the  28th  day  of  October,  1904,  for  the  purpose  of  urging 
upon  Congress  the  speedy  enactment  of  such  legislation  as  will 
afford  relief  from  unjust  discrimination  in  tariff  rates  established 
by  the  railway  corporations  of  the  country,  resulting  in  undue  pref- 
erence and  advantage  to  certain  localities  and  sections  and  certain 
descriptions  of  traffic,  and  consequent  undue  prejudice  and  disad- 
vantage to  others;  and  will  also  provide  effectual  means  of  protec- 
tion to  the  public  from  the  imposition  of  unreasonable  and  oppres- 
sive charges  for  the  performance  of  public  service  in  the  transpor- 
tation of  passengers  and  property  as  common  carriers  under  fran- 
chises granted  by  the  people;  all  of  which  is  in  violation  of  the  Act 
to  Regulate  Commerce,  approved  February  4,  1887,  the  provisions 
of  which,  as  interpreted  by  the  Supreme  Court  of  the  United 
States,  have  proved  ineffectual  to  prevent  such  violation; 

Do  hereby  respectfully  petition  your  honorable  body  to  speed- 
ily enact  such  legislation  as  will  ensure  the  enforcement  of  the 
primary  requirement  of  the  aforesaid  act,  namely,  that 

"All  charges  for  any  service  rendered  or  to  be  rendered  in  the 
transportation  of  passengers  or  property,  or  in  connection  there- 
with, or  for  the  receiving,  delivering,  storage,  or  handling  of  such 
property,  shall  be  reasonable  and  just." 

And  your  petitioners  further  pray  that  this  legislation  be  given 
the  precedence  over  other  pending  legislation  which  its  great  public 
importance  demandst 

It  is  the  sense  of  this  Convention  that  the  Interstate  Commerce 
Commission,  created  by  the  aforesaid  act  "to  execute  and  enforce 


18 

the  provisions  of  the  act,"  should  be  invested  with  authority,  upon 
full  hearing  of  any  formal  complaint,  to  prescribe  reasonable  and 
equitable  rates  to  be  substituted  by  the  carrier  in  place  of  those 
found  to  be  unreasonable  or  discriminative;  the  order  of  the  Com- 
mission in  such  case  to  become  operative  upon  due  notice  to  the 
carrier  and  so  continue  until  set  aside  by  the  court  of  last  resort, 
unless  upon  review  in  the  circuit  court  of  the  United  States  it  is 
found  that  such  order  clearly  proceeds  upon  some  error  of  law. 

THE  NATIONAL  LIVE  STOCK  ASSOCIATION. 

The  following  memoiral  was  unanimously  adopted  by  the  fifth 
annual  convention  of  the  National  Live  Stock  Association: 

To  the  JionoraUe  President,  the  Senate, 

and  the  House  of  Representatives  of  the  United  States: 

The  National  Live  Stock  Association  respectfully  represents 
that  it  is  an  organization  composed  of  over  150  of  the  principal  stock 
raisers,  feeders'  and  breeders'  organizations,  live-stock  exchanges, 
stock-yards  companies,  and  various  commercial  organizations  of  the 
United  States,  whose  names  we  append  hereto;  that  it  represents 
more  than  |4,000,000,000  of  invested  capital,  and  that  it  was  organ- 
ized for  the  purpose  of  promoting  the  best  interests  of  the  live-stock 
industry  of  this  country. 

This  association,  in  behalf  of  its  constituency,  earnestly  urges 
upon  Congress  the  great  importance  and  increasing  need  of  Federal 
legislation,  which  will  give  to  the  Interstate  Commerce  Commission 
adequate  power  to  correct  discriminations,  remove  preferences, 
abate  unreasonable  rates,  and  where  necessary,  to  prescribe  the 
maximum  and  minimum  rates,  making  its  decision  effective  pending 
any  appeal  to  the  courts. 

When  the  present  Interstate  Commerce  Law  was  enacted  in 
1887  it  was  at  least  popularly  supposed,  and  we  believe  clearly  in- 
tended, that  it  gave  to  the  Interstate  Commerce  Commission,  after 
due  hearing  and  investigation,  the  power  to  say  what  was  a  reason- 
able or  unreasonable  rate  and  to  enforce  its  decisions.  Court  deci- 
sions have  since  declared  that  the  Interstate  Commerce  Commis- 
sion does  not  have  the  power  to  fix  rates  for  the  future,  either  di- 
rectly or  by  indirection.  As  substantially  every  complaint  that  has 
been,  or  would  be,  brought  before  the  Commission  involves  the 
question  of  the  reasonableness  of  rates,  it  can  be  readily  seen  that 
these  court  decisions  practically  wipe  out  the  only  real  power  the 
Commission  was  supposed  to  have,  and  limit  its  usefulness  to  the 
collection  and  promulgation  of  statistics. 

While  governmental  control  over  railroad  charges  through  the 
medium  of  the  Interstate  Commerce  Commission  has  been  grad- 
ually fading  away,  the  general  railroad  situation  has  undergone 
portentous  changes.  Little  independent,  carriers  have  been  forced 
to  the  wall  and  absorbed  by  their  larger  competitors,  which  in  turn 
have  combined  with  or  sold  out  to  other  larger  competing  systems, 
until  to-day,  by  this  centralization,  the  rail  transportation  facilities 
of  this  country  are  practically  controlled  by  scarce  half  a  dozen 


19 

different  interests.  By  these  transitions,  reorganizations,  and  com- 
binations, added  burdens  have  not  only  been  placed  upon  the  man 
who  pays  the  freight  by  reason  of  increases  in  the  fixed  charges  or 
indebtedness  of  the  railroads,  but  the  public,  which  now  has  greater 
need  of  intelligent  and  effective  Federal  supervision  and  regulation 
of  railroad  charges,  has  less  protection  to-day  than  previous  to  the 
enactment  of  the  present  Interstate  Commerce  Law. 

The  general  and  marked  advance  in  rates  dur'ing  the  past  three 
years  of  unexampled  prosperity  to  the  railroads  were  apparently  un- 
necessary, and  seemingly  unwarranted  upon  any  other  theory  than 
the  intent  of  the  railroads  to  exact  all  they  could.  The  multiplied 
economies  of  railroad  operation,  together  with  the  enormous  in- 
crease in  the  volume  of  traffic,  would  seem  to  logically  suggest  a 
reduction  instead  of  an  advance.  Their  action,  however,  enables  us 
to  unmistakably  forecast  what  they  would  do,  unrestrained  by  Fed- 
eral control,  when  by  further  consolidations  or  by  other  agencies 
competition  becomes  entirely  stifled. 

The  members  of  the  National  Live  Stock  Association  recognize 
that  the  railroads  are  powerful  agencies  of  progress,  and  that  more 
than  any  other  factor,  they  have  contributed  to  the  development  of 
the  country.  The  superb  service  they  perform  merits  our  commen- 
dation. We  expect  to  pay  the  railroads  the  cost  of  the  service  they 
render,  together  with  a  reasonable  profit  on  their  investment;  we 
do  not  want  the  service  for  any  less,  nor  ought  we  to  be  compelled 
to  pay  more.  We  are  not  presuming  to  say  what  are  or  may  be 
reasonable  or  fair  rates,  but  we  do  emphatically  protest  against 
the  railroads  being  the  sole  arbiters  of  their  charges  and  exacting 
what  they  think  the  traffic  will  stand,  or,  in  plainer  language,  all 
they  can  get. 

If  railroad  rates  are  fair  and  reasonable  the  railroads  should 
not  fear  any  investigation  of  them  by  an  impartial  tribunal.  The 
objections  they  make  against  the  proper  Federal  supervision  of 
rates  by  an  expert  commission  confirms  the  suspicion,  that  rail- 
road rates  need  regulating. 

Either  the  Government  must  assume  at  once  an  intelligent  and 
comprehensive  control  over  the  railroad  charges  or  prepare  for  ab- 
solute ownership  of  the  transportation  facilities  of  this  country. 

For  these,  among  many  other  patent  reasons,  the  members  of 
the  National  Live  Stock  Association  respectfully  request  Congress 
to  give  early  attention  to  this  much  needed  legislation,  which  has 
already  been  too  long  delayed. 

THE  NATIONAL  ASSOCIATION  OF  MANUFACTURERS. 

The  National  Association  of  Manufacturers,  at  the  time  of  its 
last  annual  convention  adopted  the  following: 

"Whereas,  under  decisions  of  the  Supreme  Court  of  the  United 
f=5tates  the  Interstate  Commerce  Commission  has  been  divested  of 
the  authority  which  it  exercised  for  a  period  of  ten  years  from  its 
organization,  to  determine  to  what  extent  a  rate  complained  of  for 
the  transportation  of  passengers  or  property  is  found  to  be  unjust 


20 

or  unreasonable,  and  its  authority  is  limited  to  the  mere  declaration 
that  the  rate  is  found  to  be  in  violation  of  the  Act  to  Regulate  Com- 
merce, and  to  notifying  the  carrier  to  'cease  and  desist  from  the 
continuance  of  such  violation,'  leaving  the  carrier  to  be  its  own 
judge  as  to  what  change  is  necessary  to  bring  it  into  conformity 
with  the  provisions  of  the  Act;  and 

"Whereas,  This  authority  has  proven  to  be  inadequate  for  the 
protection  of  the  public  against  the  continuous  practice  of  unjust 
discrimination  in  rates  between  different  sections  and  localities  and 
between  different  descriptions  of  traffic  in  the  classification  of 
freight  and  otherwise,  or  against  the  continued  enforcement  of  rates 
which  are  in  themselves  unreasonable;  therefor, 

''Resolved,  That  the  National  Association  of  Manufacturers  of 
the  United  States  in  convention  assembled  on  the  19th  day  of  May, 
A.  D.  1904,  respectfully  petitions  and  does  hereby  petition  the  Con- 
gress of  the  United  States  to  enact  legislation  at  its  next  session 
empowering  the  said  Interstate  Commerce  Commission,  when  a  rate 
or  practice  complained  of  is  found  to  be  discriminative  or  unreason- 
able, to  determine  what  change  shall  be  made  therein ;  which  deter- 
mination shall  be  operative  within  thirty  days  and  so  continue  until 
over-ruled  or  suspended  under  judicial  proceedings." 

ACTION  BY  CONGRESS  DESIRED. 

It  would  seem  that  the  commercial,  manufacturing  and  produc- 
ing interests  of  the  country  have  expressed  their  desire  and  need 
in  this  direction  as  plainly  as  possible — save,  perhaps,  by  means  of 
the  ballot. 

Opposition  to  the  legislation  sought  will  be  found  to  rest  solely 
upon  objection  to  the  principle  of  governmental  regulation  in  any 
form. 

The  framers  of  our  Constitution,  forseeing  the  country's  growth 
and  anticipating,  in  the  light  of  history,  the  need  of  protection  for 
the  people's  rights,  wisely  provided  that  it  should  be  the  right  and 
duty  of  the  Congress  to  regulate  commerce  between  the  States.  The 
United  States  Supreme  Court  has  specifically  affirmed  and  so 
clearly  established  this  right  that  it  can  not  be  controverted. 

Upon  the  question  of  constitutionality  of  the  provisions  of  the 
Cooper-Quarles  Bill,  the  following  citations  will  prove  our  position : 

POWER  OF  CONGRESS  OVER  INTERSTATE  COMMERCE. 

Congress  has  power  to  constitute  tribunals  inferior  to  the  Su- 
preme Court.    (Cons.  U.  S.,  section  8,  clause  9.) 

To  regulate  commerce  with  foreign  nations  and  among  the 
several  States  and  with  the  Indian  tribes.  (Cons.  U.  S.,  section  8, 
clause  3,  Article  I.) 

The  making  and  fixing  of  rates  is  a  legislative,  and  not  a  judi- 
cial, function;  and  the  decisions  are  uniform  in  declaring  that 
statutes  creating  railroad  commissions,  and  giving  them  the  power 
to  make  and  fix  rates,  are  not  unconstitutional  as  delegating  a  legis- 
lative power  which  belongs  only  to  the  legislature  itself.     (8  Am. 


21 

and  Eng.  Ency.  of  Law,  911;  Chicago  &  N.  W.  R.  Co.  v.  Dey,  4  Rv. 
&  Corp.  L.  J.,  465;  35  Fed.  Rep.  866;  2  Inters.  Com.  Rep.,  325;  1  L. 
R.  A.,  744.  Granger  Cases,  94  U.  S.,  113-187;  24  L.  ed.,  77-97.  State 
ex  rel.  Railroad  &  Warehouse  Commission  v.  Chicago,  M.  &  St.  P. 
R.  Co.,  38  Minn.,  281;  37  N.  W.,  782.  State  ex  rel.  Board  of  Trans- 
portation V.  Fremont,  E.  &  M.  Valley  R.  Co.,  22  Neb.,  313;  35  N.  W., 
118;  23  Neb..  117;  36  N.  W.,  308.  Tilley  v.  Savannah,  F.  &  W.  R. 
Co.,  5  Fed.  Rep.,  641.  Georgia  R.  Co.  v.  Smith,  70  Ga.,  694.  New 
York  &  N.  E.  R.  C.  v.  Bristol.  151  U.  S.,  556;  38  L.  ed.,  269.  Regan 
V.  Farmers'  Loan  &  T.  Co.,  154  U.  S.,  362;  38  L.  ed.,  1014;  4  Inters. 
Com.  Rep.,  560,  and  cases  quoted.  Ames  v.  Union  P.  R.  Co.,  64  Fed. 
Rep.,  165;  4  Inters.  Com.  Rep.,  835.  Interstate  Commerce  Commis- 
sion V.  Cincinnati,  N.  O.  &  T.  P.  R.  Co.,  167  U.  S.,  479;  42  L.  ed.  243. 
Texas  &  P.  R.  Co.  v.  Interstate  Commerce  Commission,  162  U.  S.. 
197;  40  L.  ed.,  940.     Smyth  v.  Ames,  169  U.  S..  466;  42  L.  ed.,  819.) 

When  the  law  has  confided  to  a  special  tribunal  the  authority 
to  hear  and  determine  certain  matters  arising  in  the  course  of  its 
duties,  the  decision  of  that  tribunal,  within  the  scope  of  its  au- 
thority, is  conclusive  upon  all  others.  (Johnson  v.  Towsley,  13 
W\all,'72;  20  L.  ed.  485.) 

The  legislature's  determination,  either  directly  or  indirectly,  of 
what  is  reasonable,  is  conclusive,  subject  only  to  charter  rights  and 
to  the  fact  that  the  rates  established  will  give  some  compensation 
to  the  carrier.  (Atty.  Gen.  v.  Old  Colony  R.  Co.,  160  Mass.,  62;  22 
L.  R.  A.,  112.  Chicago'  &  N.  W.  R.  Co.  v.  Dey,  35  Fed.  Rep.,  866; 
2  Inters.  Com.  Rep.,  325;  1  L.  R.  A.,  744.) 

The  uses  of  railroad  corporations  are  public,  and  therefore  they 
are  subject  to  legislative  control  in  all  respects  necessary  to  protect 
the  public  against  danger,  injustice,  and  oppression.  (New  York 
&  N.  E.  R.  Co.  V.  Bristol,  151  U.  S.,  556;  38  L.  ed.,  269.) 

The  making  and  fixing  of  rates  by  either  a  legislature  directly 
or  by  a  commission  do  not  work  a  deprivation  of  property  without 
due  process  of  law.  (Munn  v.  Illinois,  94  U.  S.,  113;  24  L.  ed.,  77. 
Davidson  v.  New  Orleans,  96  U.  S.,  97;  24  L.  ed.,  616.  Stone  v. 
Farmers'  Loan  &  T.  Co.,  116  U.  S.,  307;  29  L.  ed.,  636.  Dow  v. 
Beidelman,  125  U.  S.,  680;  31  L.  ed.,  841;  2  Inters.  Com.  Rep.,  56. 
Minneapolis  &  St.  L.  R.  Co',  v.  Beckwith,  129  U.  S.,  26;  32  L.  ed.. 
585,  and  cases  cited.  Budd  v.  New  York,  143  U.  S.,  517;  36  L.  ed.. 
247;  4  Inters.  Com.  Rep.,  45.  New  York  &  N.  E.  R.  Co.  v.  Bristol, 
151  U.  S.,  556;  38  L.  ed.,  269.  Regan  v.  Farmers'  Loan  &  T.  Co., 
154  U.  S.,  362;  38  L.  ed.,  1014;  4  Inters.  Com.  Rep.,  560.) 

Several  of  the  State  statutes,  under  State  constitutions,  con- 
taining nearly  identical  provisions  on  the  subject  as  the  Federal 
Constitution,  allowing  State  railroad  commissions  to  make  and  fix 
railway  rates  for  such  States,  which  said  rates  were  to  be  operative 
until  set  aside  by  the  Courts,  have  been  upheld  as  valid  and  con- 
stitutional by  the  United  States  Supreme  Court.  (See  Pensacola 
&  A.  R.  Co.  V.  State  (Fla.),  3  L.  R.  A.,  661,  with  extensive  notes  to 
that  case  and  notes  to  Winchester  &  L.  Turnp.  Road  Co.  v.  Croxton 
(Ky.),  33  L.  R.  A.,  177.) 

In  the  case  of  Munn  v.  Illinois,  94  U.  S.,  113,  24  L.  ed.,  77,  the 
Supreme  Court  of  the  United  States,  after  a  thorough  review  of  the 


22  ■  • 

American  and  English  authorities,  has  laid  down  the  following 
fundamental  principles  governing  public  carriers  and  other  quasi- 
public  institutions: 

1.  Under  the  powers  inherent  in  every  sovereignty,  a  govern- 
ment may  regulate  the  conduct  of  its  citizens  toward  each  other, 
and,  when  necessary  for  the  public  good,  the  manner  in  which  each 
shall  use  his  own  property. 

2.  It  has,  in  the  exercise  of  these  powers,  been  customary  in 
England  from  time  immemorial,  and  in  this  country  from  the  first 
colonization,  to  regulate  ferries,  common  carriers,  hackraen,  bakers, 
millers,  wharfingers,  auctioneers,  inn-keepers  and  many  other  mat- 
ters of  like  quality,  and  in  so  doing  to  fix  a  maximum  charge  to  be 
made  for  services  rendered,  accommodations  furnished,  and  articles 
sold. 

3.  The  fourteenth  amendment  to  the  United  States  Constitu- 
tion does  not  in  any  wise  amend  the  law  in  this  particular. 

4.  When  the  owner  of  property  devotes  it  to  a  use  in  which 
the  public  has  an  interest,  he  in  effect  grants  to  the  public  an  inter- 
est in  such  use,  and  must  to  the  extent  of  that  interest  submit  to  be 
controlled  by  the  public. 

5.  The  limitation  by  legislative  enactment  of  the  rate  of 
charges  for  services  rendered  in  an  employment  of  a  public  nature, 
or  for  the  use  of  property  in  which  the  public  has  an  interest,  es- 
tablishes no  new  principle  in  the  law,  but  only  gives  a  new  effect 
to  an  old  one. 

Thus  the  highest  court  has  permanently  established  the  broad 
principle  that  the  public  has  the  right  to  regulate  charges  in  all 
enterprises  affected  with  a  public  use.  To  this  doctrine  all  the 
courts  have  steadfastly  adhered.  In  this  leading  case  it  was  also 
held  that  the  courts  had  no  right  to  interfere  with  the  rates  fixed 
by  the  law-making  power.  This  doctrine,  however,  has  been  since 
somewhat  qualified  in  the  case  of  Reagan  v.  Farmers'  Loan  &  T. 
Co.,  154  U.  S.,  412,  38  L.  ed.,  1028;  4  Inters.  Com.  Rep.,  1028,  and 
other  cases  there  cited,  where  it  is  held  that  when  rates  are  con- 
fiscatory the  courts  may  so  declare  and  relegate  the  matter  back  to 
the  law-making  power  for  new  rates  by  which  a  reasonable  profit 
is  left  to  the  carrier.  But  the  principle  that  the  legislative  power, 
either  directlv  or  indirectlv  through  a  commission,  can  fix  rates  of 
freight  and  passenger  traffic  within  this  constitutional  limitation, 
has  been  uniformly  upheld  in  all  the  decisions  of  the  United  States 
Supreme  Court  upon  this  subject. 

The  question  before  Congress  is:  Shall  the  transportation  cor- 
porations of  this  country  be  permitted  to  continue  to  have  freedom 
from  all  restraint  in  their  power  to  make  or  destroy  the  business 
of  a  man,  an  industry  or  a  community,  and  to  impose  a  tax,  limited 
only  by  their  own  desire,  upon  every  citizen  for  everything  that  he 
may  buy,  to  eat,  wear  or  use,  or  shall  the  Government  perform  its 
duty  to  protect  the  people  and  the  commerce  of  the  country,  through 
a  wise  and  conservative  exercise  of  its  constitutional  right  to  pre- 
vent injustice  and  enforce  observance  of  the  laws,  on  the  part  of 
common  carriers? 


23 


TESTIMONY  OF  RECORD. 

The  principle  embraced  within  the  Cooper-Quarles  Bill,  i.  e., 
authority  for  the  Interstate  Commerce  Commission  to  correct  a 
rate  which  shall  be  found  to  be  unjust  or  unlawful,  has  been  per- 
sistently advocated  before  Congress  during  the  past  five  years.  Ex- 
haustive hearings  have  been  held  by  the  committees  of  both  House 
and  Senate,  upon  the  several  bills  which  have  been  introduced,  and 
every  provision  contained  in  the  pending  measure  has  been  thor- 
oughly covered.  It  would  seem  needless  to  continue  to  summon 
business  men  to  Washington  from  all  parts  of  the  country  to  reiter- 
ate the  testimony  and  arguments  which  are  already  of  record. 

The  subject  was  presented  to  the  committees  of  the  last 
(Fifty-seventh)  Congress  in  a  particularly  clear  and  comprehensive 
manner.  The  following  extracts  from  the  record  will  give  much 
information  to  those  who  seek  or  desire  it,  and  we,  therefore  re- 
print them: 

STATEMENT  OF  HON.  JOHN  D.  KERNAN,  OF  NEW  YORK,  AU- 
THOR OF  THE  ORIGINAL  INTERSTATE  COMMERCE  ACT, 
BEFORE  THE  HOUSE  COMMITTEE. 

* 

Thursday,  April  17,  1902. 

Mr.  Kernan.  From  1883  to  1887  I  was  the  chairman  of  the 
New  York  State  Eailroad  Commission,  a  commission  that  acted 
under  the  Massachusetts  idea  of  having  power  to  investigate  and 
ascertain  the  facts  and  spread  them  before  the  public,  and  by  giv- 
ing to  the  injured  party  possession  of  the  proof  and  by  invoking  the 
aid  of  public  opinion  upon  situations  where  the  railroads  were  doing 
wrong,  seeking  in  that  way  to  accomplish,  without  the  exercise  of 
arbitrary  power,  a  regulation,  a  real  and  fair  adjustment  of  dis- 
puted questions  between  railroads  and  shippers. 

And  during  those  four  years — the  time  when  I  resigned  was  in 
1887 — this  question  of  the  Interstate  Commerce  Bill  and  the  Inter- 
state Commerce  Law  was  constantly  obtruding  itself  upon  the  at- 
tention of  every  commission  throughout  the  country,  and  the  neces- 
sity of  some  Congressional  legislation  to  reach  that  vast  mass  of 
commerce  which  could  not  be  reached  by  the  States  was  a  subject 
of  constant  study  and  investigation  and  talk;  and  pooling,  and  all 
these  questions  were  at  that  time  being  investigated  and  thought 
about  as  remedies  for  the  acknowledged  evils  which  arose,  in  the 
interests  of  railroads,  seeking,  of  course,  opportunities  to  make 
what  they  could,  and  the  shippers  seeking  advantages  at  all  points, 
low  rates  and  just  rates. 

At  the  time  Senator  Cullom's  committee  was  appointed  it 
opened  its  sessions  at  New  York  City,  and  then  went  all  over  the 
United  States  and  spent  the  entire  vacation  season  in  hearing  these 
questions,  such  as  are  before  you,  discussed.  They  honored  me  by 
asking  me  to  come  before  that  body,  and  I  think  I  appeared  as  the 
first  witness  and  talked  for  two  or  three  days,  after  having  studied 
these  matters  as  well  as  I  et)uld.     At  the  close  of  the  hearing,  and 


24 

subsequently,  Senator  Cullom  wrote  me  asking  me  to  draw  a  bill 
in  accordance  with  the  ideas  discussed,  and  I  drew  the  bill  which 
the  Senate  virtually  adopted. 

I  think  much  of  the  discussion  here  was  forecast  by  them  upon 
many  questions,  and  I  think  if  you  gentlemen  will  take  the  reports 
of  the  Cullom  committee  you  will  see  that  many  of  these  questions 
which  we  are  now  discussing  were  at  that  time  supposed  to  be  set- 
tled, and  it  was  believed  that  there  was  no  remedy  left  for  the  pur- 
pose of  correcting  the  evils  that  existed,  and  these  questions  be- 
tween shippers  and  the  carriers,  except  the  passage  of  the  Inter- 
state Commerce  Law  and  the  creation  of  the  Commission  as  a  spe- 
cial tribunal  for  the  purpose  of  hearing  and  deciding  these  ques- 
tions, and  to  a  certain  extent — I  will  point  out  afterwards  how  far — 
as  to  rates. 

THE  VASTLY  CHANGED  SITUATION. 

I  will  not  go  into  the  question  of  the  Courts  further  than  to 
say,  the  Interstate  Commerce  Commission — the  representative  of 
that  Commission — pointed  out  that  the  Courts  and  the  remedies  of 
Courts,  open  and  available  to  shippers  or  to  localities  that  were 
suffering  from  unjust  discriminations  in  rates,  or  from  too  high 
rates,  had  ceased  to  be  a  practical  source  of  relief,  owing  to  the  vast 
growth  of  the  railroads,  and  owing  to  the  vastly  changed  compli- 
cated situation  which  arose  in  reference  to  these  questions.  The 
procedure  of  all  of  our  Courts,  mind  you,  was  based  upon  the  ques- 
tions which  arose  when  the  stage  coach  was  the  great  means  of 
transportation  in  England  and  this  country,  and  those  methods  of 
procedure  are,  therefore,  as  far  behind  the  present  necessities  of 
the  tribunal  to  pass  upon  them  as  the  locomotive  and  its  train  to- 
day, and  its  capacity  of  moving  freight  in  vast  quantities  at  a  time, 
is  beyond  the  conditions  that  existed  when  the  stage  coach 
flourished. 

COMMON  LAW   REMEDIES  THROUGH   THE   COURTS 

INADEQUATE. 

So  that  in  many  of  these  questions,  I  say,  you  can  regard  the 
Interstate  Commerce  Act  as  deciding  that  the  time  had  come  when 
the  common-law  remedies  of  the  Courts  had  ceased  to  be  sufficient 
for  the  protection  of  the  public  against  railroads  upon  these  ques- 
tions— for  the  speedy  decision  of  these  questions  between  the  mil- 
roads  and  the  public — and  that  the  experience  of  twenty  or  thirty 
States  up  to  that  time  had  been  virtually  adding  to  the  conclusions 
and  had  finally  reached  that  as  a  conclusion;  that  it  was  necessary 
to  have  some  special  tribunal  of  men  whose  time  was  devoted  to 
the  study  of  these  questions,  in  order  to  have  anything  practical 
in  the  way  of  a  body  that  could  reach  a  speedy  conclusion. 

POWER   OF   COMMISSION    TO    FIX    RATES   REMEDIALLY   NOT 
QUESTIONED  FOR  TEN  YEARS. 

I  have  had  a  good  many  experiences  before  the  Interstate  Com- 
merce Commission.     I  have  been  employed  by  Boards  of  Trade  and 


25 

many  bodies  of  that  kind.  I  have  never  been  for  the  railroads,  but 
always  on  the  other  side  of  the  question.  But  in  all  of  those  cases, 
up  to  the  time  that  the  Supreme  Court  of  the  United  States  made 
the  decision — which  was  against  the  unanimous  opinions  of  the 
Courts  below — in  1897,  ten  years  after  the  act  was  passed,  neither 
the  Commission  nor  the  railroads,  nor  anybody  else,  took  the  posi- 
tion that  they  did  not  have  the  power  to  fix  rates  to  the  extent  that 
we  now  ask  that  it  be  given  to  them.  The  orders  of  the  Commis- 
sion all  ran  in  that  way,  that  they  found  that  the  rate  complained 
of  was  unreasonable  to  such  an  extent,  and  that  the  carriers  should 
cease  and  desist  from  charging  said  rate,  and  should  thenceforth 
charge  the  rate  prescribed. 

That  was  never  questioned  until  the  case  which  I  carried  to  the 
Supreme  Court  of  the  United  States,  and  argued  there  twice,  "The 
import  rate  case,"  and  then  also  in  the  "Social  Circle  case";  and 
right  here  I  may  say  that  that  includes  the  question  whether  the 
inquiry  whether  rates  are  reasonable  or  not  is  a  judicial  act.  That 
is,  whether  the  inquiry  before  the  Interstate  Commerce  Commis- 
sion, whether  a  rate  is  or  is  not  reasonable,  is  a  judicial  act,  and 
the  Supreme  Court  says,  "But  to  prescribe  rates  for  the  future,  is 
a  legislative  act."  So  that  you  have  in  this  Commission  a  combina- 
tion of  the  duty  of  saying,  first,  whether  the  rate  is  fair  and  rea- 
sonable, and  then,  second,  as  a  part  of  their  order,  what  the  rate 
shall  be  for  the  future. 

So,  under  the  United  States  Supreme  Court's  decision,  you  have 
a  delegation  of  the  sole  legislative  power  of  letting  that  Commis- 
sion say  what  for  the  future  shall  be  the  rate;  and  whether  that  is 
a  dangerous  grant  of  power,  whether  it  exists,  whether  it  was 
originally  designed  by  the  Interstate  Commerce  Act,  is  a  question. 
The  act  has  failed  for  the  lack  of  that  power  up  to  the  present  time 
to  accomplish  the  result  intended. 

CONGRESS  CAN  DELEGATE  THE  POWER. 

Mr.  Adamson.  Do  you  think  that  Congress  can  delegate  that 
power? 

Mr.  Kernan.     The  Supreme  Court  holds  that  it  can. 

Mr.  Adamson.     That  Congress  can  delegate  it? 

Mr.  Kernan.  Yes,  sir;  they  hold  it  in  all  its  fullness  in  refer- 
ence to  all  these  laws,  in  reference  to  Texas  and  these  other  States. 
The  laws  have  been  brought  up,  for  instance,  in  the  Texas  case, 
where  the  order  of  the  Texas  Commission  was  appealed  to  the  Su- 
preme Court  of  the  United  States  and  they  reversed  the  order  and 
held  that  it  violated  the  Constitution  in  taking  property  from  the 
railroads.  That  is,  it  was  d(?cided  in  that  case  that  the  Commis- 
sion under  its  power  to  fix  rates  could  not  confiscate;  they  can  not 
fix  a  rate  that  is  lower  than  affords  a  railroad  a  reasonable  return. 

Mr.  Adamson.     That  was  a  State  Commission? 

Mr.  Kernan.     Yes,  sir. 

Mr.  Adamson.  Most  of  these  States  have  a  constitutional  pro- 
vision authorizing  the  railroad  commission 

Mr.  Kernan.     Yes,  sir;  but  they  hold  that  it  is  a  legislative 


26 

function  that  can  be  delegated.  The  Supreme  Court  of  the  United 
States  has  held  that  proposition,  and  the  Interstate  Commerce  Act 
has  never  been  questioned  by  the  Supreme  Court.  They  simply  say 
that  Congress  has  not  given  the  Interstate  Commerce  Commission 
that  power,  but  it  has  been  held  positively  that  the  Congress,  or  the 
legislature  of  a  State,  can  delegate  that  portion  of  its  power  which 
authorizes  it  to  fix  rates  for  the  future. 

And  if  you  go  further  the  Commission  is  authorized  to  pre- 
scribe rates  for  the  'future.  There  you  are  delegating  to  the  Com- 
mission a  part  of  the  legislative  power  that  you  exercise,  but  you 
can  not  delegate  it  to  be  exercised  by  the  Commission  in  any  other 
way  than  you  would  exercise  it  yourselves,  and  necessarily  its  exer- 
cise will  be  always  subject  to  judicial  review.  Whether  a  rate 
fixed  is  right  or  not  it  is  always  to  be  subject  to  review. 

Mr.  Mann.  This  bill,  of  course,  provides  for  a  judicial  review, 
■or  rather  method  of  review,  of  the  action  fixing  rates. 

Mr.  Kernan.     Yes,  sir. 

Mr.  Mann.  Now,  these  gentlemen  coming  here  representing 
business  and  shipping  interests  have  the  impression  that  that  is  the 
only  method  of  reviewing  the  rate  fixed  by  the  Interstate  Commerce 
Commission,  and  until  the  Courts  in  that  method  may  have  decided 
that  those  rates  are  unreasonable  the  rates  shall  remain  in  force. 
What  do  you  say  about  that? 

Mr.  Kernan.  Whv,  I  understand  the  Nelson-Corliss  Bill  to 
prescribe  that  a  rate  fixed  by  the  Commission  shall  be  fixed  as 
though  it  had  been  done  by  yourselves 

Mr.  Mann.     Yes. 

Mr.  Kernan  (continuing).  Subject  to  the  right  of  the  railroad 
to  adopt  the  legal  method  provided  in  this  bill  for  reviewing,  or  sub- 
ject to  any  other  common-law  method  that  exists. 

Mr,  Mann.  That  is  what  I  wanted  to  get  at.  Has  Congress 
the  power  to  say  that  the  Courts  shall  not  entertain  original  juris- 
diction of  a  suit  for  injunction? 

Mr.  Kernan.  An  act  of  Congress  of  itself  in  that  regard  is 
never  construed  as  depriving  the  Courts  of  any  jurisdiction  infer- 
entially.  Now,  there  is  nothing  in  this  except  an  inference  that 
it  is  the  only  method. 

There  is  nothing  in  this  bill  to  the  effect  that  this  shall  be  the 
only  method.  I  think  this  bill  leaves  it  open  to  the  railroads  to 
say  upon  attack  of  a  decision  that  a  certain  rate  is  unjust;  that 
they  can  pursue  this  method  for  obtaining  obedience  to  it  or  any 
other  common-law  remedy  of  the  United  States  Court  for  that  pur- 
pose. 

Mr.  Mann.  So  that,  as  a  matter  of  fact,  in  your  judgment,  if 
this  bill  became  a  law,  the  railroad  ccTmpanies  would  have  the  same 
right  in  Court  to  prevent  the  putting  into  operation  of  tariff  rates 
fixed  by  the  Interstate  Commerce  Commission  that  they  now  have 
'  to  prevent  the  putting  into  operation  of  rates  fixed  by  a  State  Com- 
mission? 

Mr.  Kernan.  Yes,  sir;  they  would  do  exactly  as  they  have 
done.  As  I  told  you,  during  the  ten  years  during  which  I  was 
engag'ed  in  these  questions  under  the  first  law,  the  railroads  never 


27 

questioned  the  fact  that  the  power  of  the  Commission  was  just 
what  we  ask  that  it  shall  be  under  this  law. 

Mr.  Adamson.  Don't  jou  think,  as  a  lawyer,  that  we.  could 
render  the  public  a  greater  service  in  any  other  way  by  facilitating 
and  expediting  hearings  regarding  the  questions  growing  out  of 
transportation? 

Mr.  Kbrnan.  That  was  all  gone  into  by  the  Cullom  committee. 
Are  the  remedies  in  the  Courts  sufficient  to  protect  the  people? 

Now,  the  reason  for  the  establishment  of  the  Interstate  Com- 
merce Commission  was  because  after  investigation  that  able  Com- 
mittee reached  the  conclusion,  and  so  reported,  giving  their  reasons 
at  great  length  in  the  report,  that  the  remedies  in  the  Courts  had 
become  so  obsolete  and  difficult  of  enforcement  that  there  was  no 
protection  for  the  shippers  in  that  direction. 

STATEMENT  OF  MR.  JOHN  D.  KERNAN— Continued. 

Friday,  April  18,  1902. 

Mr.  Kernan.  Mr.  Chairman,  I  endeavored  yesterday  to  state 
that  certain  propositions  seem  to  me  to  have  been  settled  with  re- 
spect to  the  Interstate  Commerce  Law;  that  the  express  determina- 
tion of  the  Courts  with  respect  to  the  traffic  and  freight  rates  must 
now  be  regulated  by  statute  so  as  to  protect  the  carrier  in  all  of  its 
just  rights  and  furnish  it  with  sufficient  revenue  from  its  business 
to  give  it  a  proper  income  on  the  money  and  labor  invested,  and 
also  so  as  to  protect  the  people  against  unjust  discrimination  and 
too  high  rates.  And  the  reason  of  this,  briefly,  was  because  the 
law  and  its  remedies  had  been  found  to  be  unequal  to  meet  the 
necessities  of  present  business  conditions. 

The  reasons  for  this  legislation  were  because  the  common  law 
and  its  Courts  and  remedies  were  inadequate  to  afford  the  protec- 
tion that  the  shippers  ought  to  have  against  the  railroads;  second, 
because  State  legislation  could  not  reach  the  subject,  and  in  the 
third  place  because  competition  was  no  longer  a  sufficient  protec- 
tion against  undue  preferences  and  high  rates. 

COMPETITION  IS  SUPERSEDED  BY  COMBINATION. 

It  is  an  old  saying  that  competition  is  impossible,  and  can  not 
be  maintained,  where  combination  is  possible,  and  that  has  been 
working  itself  out  ever  since  until  we  now  see  that  wherever  com- 
petition formerly  existed  it  has  been  eliminated  for  the  people  as 
protection  against  the  competing  lines  by  the  merging  of  securities 
and  ownership  of  each  other's  stocks  and  in  other  ways. 

Now,  this  act,  I  want  to  state,  as  you  may  know,  was  based  on 
the  English  act  of  1854,  which  was  very  wise  in  its  provisions 
against  unjust  discriminations  and  preferences.  That  was  very 
wise  because  it  gave  us  for  our  initial  legislation  a  guide  in  the 
construction  of  that  act  which  had  taken  place  by  the  English 
Courts  from  1854  down,  and  I  always  insisted  that  that  was  the 
only  safe  way  to  start,  because  if  we  adopted  new  language,  we  did 


28 

not  know  where  it  would  land  us  upon  its  construction  by  the 
courts. 

POWER  EXERCISED   BY   COMMISSION  TO   FIX   RATES,  AFTER 

INVESTIGATION,  WAS    ACCEPTED    BY    RAILROADS 

UNTIL  DENIED  BY  THE  SUPREME  COURT. 

We  took  that  act  as  a  guide.  Then  there  was  the  appointment 
of  the  Commission,  which  all  supposed  to  have  the  power,  which  it 
exercised  for  the  first  ten  years,  to  fix  future  rates  after  an  investi- 
gation and  full  hearing  given  to  the  parties,  which  was  accepted 
by  the  railroads  and  the  Commission  and  by  every  one  that  I  know 
of  until  the  Supreme  Court  finally  decided  that  Congress  had  the 
right  to  confer  the  judicial  power  on  the  Commission  and  had  the 
right  to  confer  upon  the  Commission  the  power  to  fix  rates,  which 
is  a  power  of  legislation,  yet  it  simply  had  not  done  so  in  this  act, 
and  while  it  might  be  inferred  from  the  provisions  of  the  act,  for  in- 
stance the  provision  of  the  act  that  the  Commission  should  investi- 
gate and  if  it  reached  the  conclusion  that  the  rates  were  too  high 
should  direct  the  carrier  by  an  order  to  cease  and  desist  from  charg- 
ing the  rate  that  was  found  to  be  wrong — that  while  the  inference 
might  be  drawn  to  that  effect,  yet  the  power  was  too  great  to  be 
given  by  implication,  and  that  the  Court  would  only  recognize  it 
when  Congress  expressly  in  an  act  conferred  the  power. 

Now,  we  come  to  this  difficulty,  that  there  is  no  power  in  the 
Commission  to  prescribe  a  rate  for  the  future,  although  the  Com- 
mission finds  that  a  rate  which  is  testified  to  before  it  in  hearings  is 
unjust  and  for  some  reason  wrbng,  and  that  is  the  reason  that  a 
second  appeal  to  Congress  is  necessary  to  remove  that  defect  in  the 
law,  if  it  be  a  defect;  or  at  least  if  it  is  not  a  defect,  it  was  not  in- 
tended by  the  Congress  in  the  original  act. 

THE  AIM,  NOT  HIGH  OR  LOW  RATES,  BUT  RELATIVELY  JUST. 

I  have  always  supposed  that  it  was  intended  that  that  addi- 
tional power  should  be  conferred  upon  the  Commission,  if  it  can  be 
safely  done  with  due  regard  to  all  the  parties  to  be  affected  by  it. 
There  is  another  thing  which  I  want  to  suggest  to  the  committee 
and  which  they  should  bring  up  before  the  members  of  the  Commis- 
sion when  they  see  them.  I  do  not  think  this  power  of  the  Commis- 
sion was  ever  questioned  until  it  came  up  in  the  import-rate  case  and 
the  Social-Circle  case,  which  were  decided  in  the  Supreme  Court  of 
the  United  States.  And,  again,  there  is  not  any  trouble  about  high 
rates.  The  Commission  never  had  any  difficulty  about  lowering 
rates.  The  shippers  do  not  care  what  rates  are  charged.  It  is  the 
relation  of  rates  between  competitors;  that  is  the  thing  they  want 
fixed. 

You  will  find  in  99  cases  out  of  100  that  the  complaint  before 
the  Commissioners  has  not  been  that  the  rates  are  too  high.  It  is 
all  a  question  of  the  relation  of  the  rates  to  be'  established,  and  not 
only  between  all  sorts  of  competitors  reaching  common  markets  in 
this  country,  but  also  abroad.  That  is  the  question,  and  that  is  why 


29 

you  have  got  to  have  a  commission,  and  that  is  why  it  has  to  have 
power.  You  can  see  how  difficult  it  is  for  Courts  to  deal  with  that 
question. 

For  instance,  you  take  the  question  of  two  farmers  living  100 
miles  from  Chicago,  one  on  one  railroad  and  one  on  another.  They 
are  both  competitors  for  the  foreign  and  domestic  market.  They  are 
on  different  lines,  and  those  lines  are  in  different  States.  Now,  the 
farmer  at  one  point  is  charged  for  carrying  grain  to  Chicago  3  cents 
a  bushel.  The  farmer  on  the  other  road  is  charged  1^  cents  a  bushel. 
Now,  that  difference  of  14^  cents  a  bushel,  you  see,  wipes  out  to  a 
certain  extent  the  business  of  the  farmer  who  has  to  pay  3  cents. 
You  can  not  deal  with  that  situation  any  way  except  through  the 
Interstate  Commerce  Commission,  which  can  bring  both  of  these 
rates  before  it  and  enter  into  a  consideration  of  these  relative  rates, 
and  fix  them  in  the  proper  relations  toward  each  other. 

It  may  be  that  the  interests  of  one  road,  and  the  form  of  busi- 
ness  of  one  road,  may  permit  a  higher  rate.  If  that  is  so  it  will  have 
to  stand.  But  it  may  be  that  of  these  rates  one  is  higher  and  the 
other  lower  than  it  ought  to  be.  Those  things  have  to  be  met 
by  the  power  of  somebody  who  has  power  to  fix  relative  rates,  and 
it  is  relative  rates  of  this  country  that. are  troublesome. 

Of  course,  on  the  1st  of  January,  1900,  the  railroads  changed 
rates  on  854  different  articles,  and  they  lowered  them  on  6  and 
raised  them  on  the  rest  of  the  articles.  The  increases  were  from 
100  per  cent  down  to  15  per  cent.    The  average  was  25  per  cent. 

Now,  after  the  long  period  of  depression  that  the  railroads  have 
been  suffering  from  I  do  not  think  that  was  an  excessive  rise  in  the 
rates,  and  the  only  thing  in  those  rates  is  that  it  should  be  consid- 
ered by  somebody  with  authority  and  ability  and  training  to  go  into 
the  consideration  of  the  relative  fairness  as  between  competitors 
at  different  points  and  upon  different  roads. 

ORIGINAL   INTENTION   OF   INTERSTATE   COMMERCE  ACT  TO 
CONFER  POWER  TO  CORRECT  RATES. 

Now,  the  last  to  be  considered,  is  giving  the  Commission  the 
power:  "to  determine  what  rate,  relation  of  rates,  classification,  or 
other  practice  should  be  observed  in  the  future  in  order  to  correct 
the  wrong  found  to  exist,  and  it  shall  order  said  defendants  to  ob- 
serve the  same." 

That  is  to  be  after  a  full  hearing;  "after  full  hearing  had."  Of 
course  that  should  be  so.  That  is  right.  The  hearing  should  be  full 
and  complete  before  there  should.be  any  order  entered  by  which 
any  rate  should  be  changed  for  the  future.  And  I  intend  to  say 
more  than  I  have  about  that;  I  think  that  was  the  original  inten- 
tion of  the  original  act.  I  know  that  our  Commissioners  who  ap- 
peared before  Senator  Cullom's  committee,  and  who  had  been  serv- 
ing for  years  before  State  Boards  who  had  recommendatory  pow- 
ers, pointed  out  that  our  experience  had  been  such  as  to  show  that 
at  first,  when  a  commission  is  new,  or  in  a  small  State  where  there 
is  not  too  much  vast  railroad  business  for  it  to  consider,  so  that 
its  action  is  lost  sight  of,  these  recommendations  have  power.     In 


30 

Massacliusetts  they  had  force  for  a  number  of  years,  and  when  I 
was  on  the  New  York  Commission  as  the  first  chairman,  the  first 
four  years  of  its  existence,  the  first  question  which  came  up  and 
which  we  decided  about  rates,  and  in  which  we  reduced  the  rate  to 
some  extent,  the  newspapers  were  full  of  it. 

It  was  a  new  body,  and  its  decisions  were  watched  and  given 
prominence,  and  talked  about,  and  there  was  a  focus  of  public  in- 
terest upon  the  railroads  upon  that  subject — as  to  whether  they 
observed  or  did  not  observe  the  findings  of  the  Commission.  If  the 
finding  was  right  the  public  sustained  it,  and  the  railroad  was 
under  that  kind  of  bias  of  public  opinion  that  made  them  observe 
it.  But  after  a  time  we  found  that  the  Commission  ceased  to  be  an 
object  of  much  interest  in  regard  to  this  question;  that  its  recom- 
mendations lost  power,  and  now  they  do  not  amount  to  anything 
there  or  anywhere  else.    There  is  no  regard  paid  to  them  whatever. 

STATEMENT  OF  HON.  JOHN  D.  KERNAN— Continued. 

Saturday,  April  19.  1902. 
DELAY  UNDER  PRESENT  LAW  RENDERS  IT  FUTILE. 

Mr.  Kernax.  We  are  after  a  practical  remedy  because  we 
have  found  under  the  act  now  that  there  is  such  delay  that  it  does 
not  accomplish  anything.  We  have  to  get  a  line  somewhere  which 
is  fair  between  the  delay  that  now  exists  and  an  arbitrary  exer- 
cise of  power  by  the  Commission  against  railroads.  It  seems  to 
me  we  reached  that  mean  line  of  safety  by  providing  that  the  United 
States  Courts  shall  have  the  absolute  power  to  suspend  the  opera- 
tion of  that  order  upon  the  application  of  the  railroad.  I  think  all 
the  experience  of  those  who  have  had  practice  in  the  United  States 
Court  is  that  the  Court  is  most  liberal  in  the  matter  of  staying  pro- 
ceedings where  a  question  of  doubt  exists  as  to  the  validity  of  the 
order  that  is  to  be  questioned  before  it. 

Mr.  RicHARsoN.  Yet,  if  the  Federal  and  Circuit  Court  refuse 
to  do  that  and  the  railroad  would  still  carry  on  their  case  to  the 
last  Court,  the  Supreme  Court  of  the  United  States,  and  that  Court 
would  hold  that  the  original  order  was  absolutely  wrong,  then 
what  remedy  has  the  railroad  company? 

Mr.  Kernan.  That  is  one  of  the  incidents  of  the  administra- 
tion of  justice. 

Mr.  RicHARSON.  What  instance  can  you  give  in  life  that  is 
equally  as  bad  as  that? Equally  as  dangerous  and  obstructive? 

Mr,  Kernan.  I  had  an  order  made  the  other  day  in  a  divorce 
case  to  pa}"  |500  counsel  fee,  |oO  a  week  alimony.  I  am  entirely 
satisfied  that  we  will  reverse  that  on  appeal,  but  I  have  to  pay  that 
1500  in  five  days  and  that  $50  a  week  right  straight  along,  and  I 
can  never  get  that  back  when  I  reverse  that.  But  that  is  one  of 
the  incidents  of  the  administration  of  justice. 

Mr.  Shackleford.  Would  not  this  be  a  fair  illustration  of  the 
difficulty  Mr.  Richardson  suggests?  Suppose  a  lot  of  shippers  in 
this  country  were  oppressed  by  unfair  rates,  and  that  went  on  for 


31 

two  years  during  their  waiting  for  the  action  of  the  Court,  and  they 
had  to  pay  unjust  and  illegal  rates  to  get  their  commerce  to  market; 
would  not  that  be  equally  as  bad? 

Mr,  Kernan.     Of  course.     Eeverybody  recognizes  that. 

HOW  INJUSTICE  MIGHT  RESULT. 

The  Chairman.  Let  me  suggest  a  point  I  would  like  to  have 
you  elucidate.  Suppose  a  railroad  company  strikes  an  adverse  cir- 
cuit judge  somewhere — and  there  have  been  such  in  the  United 
States. 

Mr.  Kernan.     Bare  instances;  yes,  sir. 

The  Chairman.  And  the  judge  refuses  to  stay  the  order  of  the 
Commission,  which  has  fixed  for  instance,  a  rate  of  |1  where  the 
rate  properly  should  be  |2.  That  order  of  $1  goes  into  effect.  They 
appeal  to  the  Circuit  Court,  which  refuses  to  stay  the  order.  They 
appeal  to  the  Supreme  Court  of  the  United  States,  which  finally 
passes  upon  the  question  and  decides  that  order  is  illegal.  It  goe.s 
back  through  the  Circuit  Court.  In  the  meanwhile  the  |1  rate  is 
being  collected.  It  goes  back  to  the  Commission,  which  thereupon 
fixes  the  rate  of  fl  and  1  cent,  and  that  goes  into  effect,  and  the 
Court  refuses  to  stay  the  order  and  they  go  to  the  Supreme  Court 
again.  They  do  not  have  to  have  a  hearing  the  second  time  to  fix 
the  second  order.  Why  could  not  the  Commission  maintain  a  low 
rate,  an  absurdly  low  rate,  if  you  choose,  for  all  time  in  that  way? 
How  under  this  bill  is  there  any  power  to  correct  an  evil  of  this 
sort,  if  one. should  arise? 

Mr.  Kernan.  I  do  not  know  that  there  is  any.  That  assumes, 
of  course,  that  a  Commission  really  acts  in  violation  of  all  princi- 
ples of  justice  and  right  about  it. 

The  Chairma>j.     It  assumes  that  there  is  a  difference  of  opin 
ion  between  the  Commissioner  and  the  railroad,  as  there  invariably 
will  be,  and  as  there  is  between  the  shippers  and  the  railroads,  as 
to  what  is  a  reasonable  rate. 

Mr.  Kernan.  I  think  it  is  impossible  to  frame  a  bill  so  that  it 
may  not  be  assumed  that  there  may  be  difficulties  arising  under  it 
on  both  sides. 

The  Chairman.  That  is  not  a  difficulty.  The  question  is 
whether  there  is  any  wa}^  of  correcting  a  possible  injustice,  and  you 
must  presume  that  such  a  case  may  arise,  because  that  is  exactly 
the  case  you  claim  as  arising  on  the  other  side. 

When  the  Court  of  last  resort  has  settled  it,  whatever  may  be 
its  decision,  it  is  settled  for  all  time.  That  is  the  only  basis  upon 
which  we  proceed.  But  here  you  can  assume  a  case  where  the 
Court  of  last  resort  decides  in  favor  of  the  railroad  company  and 
still  is  without  power  to  enforce  its  decision. 

STAYING  THE  ORDER  OF  THE  COMMISSION  RESULTS  IN  CON- 
TINUANCE OF  AN  UNJUST  RATE  IN  MOST  CASES. 

Mr.  Kernan.  In  view  of  the  injustice  that  may  be  done  on  the 
other  side  to  shippers  it  has  got  to  be  a  question  of  where  one  side 
or  the  other  is  going  to  suffer,  and  should  we  not  adopt  the  best 


32 

method  we  can  of  simply  having  it  determined  what  the  right  rate 
is,  and  then  in  case  it  is  reversed,  so  that  the  rate  is  found  to  be 
unjust  to  the  railroad,  then  that  is  one  of  the  dangers  and  one  of 
the  incidental  things  that  a  railroad  has  got  to  expect  to  suffer 
from  the  administration  of  the  law,  because  I  think  on  the  other 
hand  in  most  cases  it  is  true  that  the  maintenance  of  the  rate  in 
the  end  is  found  to  be  an  injustice  to  the  shipper. 

Mr.  Mann.  How  will  it  be  possible  for  one  Commission  to  take 
all  of  the  testimony  in  all  of  the  cases  which  would  be  brought  un- 
der this  act,  involving  railroad  rates  all  over  the  country,  in  addi- 
tion to  trying  cases? 

Mr.  Kernan.  You  must  remember  one  thing  and  it  has  been 
true  in  the  cases  we  have  tried  there.  The  Commission  keeps  ac- 
cumulating facts,  testimony,  and  so,  when  you  come  to  a  hearing 
upon  almost  any  question  you  find  a  vast  number  of  your  facts  al- 
ready covered,  covered  by  previous  decisions,  covered  by  the  filed 
tariff,  covered  by  previous  findings,  and  that  the  additional  testi- 
mony is  not  as  extensive  as  it  is  where  you  have  to  go  before  a 
Court  in  each  case,  or  a  different  Court  in  each  case,  and  go  over 
the  whole  thing.     The  Commission  accepts  accumulated  facts. 

Mr.  Mann.  Would  they  not  have  to  go  over  the  whole  thing 
in  each  case? 

Mr.  Kernan.  They  might,  but  practically  it  results  in  this: 
You  are  on  one  side  for  a  railroad,  and  I  am  on  the  other  side,  and 
we  go  before  the  Commission,  and  as  to  the  tariffs  and  the  vast 
number  of  facts,  the  Commission  having  already  possesion  of  them, 
we  consent  that  that  become  part  of  the  record  in  our  case.  That 
is  always  done.  , 

Mr.  Mann.  That  is  done  to  a  certain  extent  in  Courts  just  the 
same;  but  here  is  a  railroad  case  that  will  arise  in  New  England, 
and  another  one  in  California,  and  another  one  in  New  Orleans, 
and  forty  in  Chicago,  not  to  mention  those  in  other  parts  of  the 
country.  Now  how  is  the  Commission  going  to  be  able  if  after 
hearing  the  case,  the  Court  requires  new  evidence,  to  trot  around 
and  take  that  new  evidence  and  ever  get  the  matter  disposed  of? 

Mr.  Kernan.  I  think  as  the  Commission  proceeds  it  keeps,  as 
I  say,  eliminating  the  necessity  of  doing  that  work  all  over  again 
in  each  case,  and  keeps  accumulating  tariffs,  and  regulations,  and 
facts,  and  agreements  between  railroads,  so  that  it  has  almost  al- 
ways in  every  case  presented  all  the  fundamental  foundation  facts 
or  many  of  them.  It  has  the  experience  acquired  in  other  investi- 
gations, which  perhaps  require  in  the  present  investigation  only 
that  it  be  supplemented  by  some  new  facts  covering  the  situation. 
Take,  for  instance,  a  hearing  on  the  question  of  an  Atlanta  rate. 

Very  likely  the  Commission  has  been  through  the  question  of  the 
competition  that  applies  to  rates  generally,  from  Atlanta  to  New 
York  City,  and  therefore  it  does  not  have  to  spend  time  in  going 
through  again  and  acquiring  information  as  to  the  situation  that 
Atlanta  occupies  as  to  similar  competitive  points. 


33 

PERFECT  THE  INTERSTATE  COMMERCE  LAW. 

I  think,  Mr.  Chairman,  this  bill  will  go  very  far  toward  per- 
fecting and  carrying  out  the  system,  the  method  that  Congress 
had  in  its  mind.  I  do  not  think  we  ought  to  abandon  the  Inter- 
state-Commerce Law  now.  Having  started  upon  that  as  a  direc- 
tion in  which  we  might  ultimately  hope,  through  its  operation, 
through  the  ascertainment  of  its  defects,  through  their  correction 
and  amendment  and  changes,  in  time  to  reach  a  satisfactory  regu- 
lation of  these  questions  between  the  public  and  the  railroads,  let 
us  proceed. 

I  do  not  think  we  ought  to  stop  now.  I  think  the  effort  of 
every  legislature  and  every  man  that  talks  to  them  ought  to  be 
to  try  to  perfect  that  law,  so  we  may  at  least  in  the  end  have  the 
law  as  it  ought  to  be,  as  perfect  as  it  can  be;  and  then,  having  given 
it  a  trial,  we  shall  know  whether  regulation  by  law  and  by  statute 
of  these  great  questions  between  the  carriers  and  the  people  is  a 
practical  solution  of  the  difficulty.  But  until  we  have  an  amend- 
ment of  the  law,  reasonable  and  just  to  the  end  of  correcting  its 
defects,  we  never  can  know  really  whether  the  Interstate-Commerce 
Law  is  or  is  not  going  to  be  a  solution  of  these  transportation  diflfi- 
culties. 

STATEMENT  OF  HON.  JOHN  D.  KERNAN,  OF  NEW  YORK,  BE- 
FORE  THE  SENATE  COMMITTEE. 

Friday,  April  18,  1902. 

The  Chairman.  Please  state  your  name,  business  or  occupa- 
tion, and  whom  you  represent. 

Mr.  Kernan.  My  name  is  John  D.  Kernan;  my  office  is  at  39 
Liberty  street.  New  York  City.  I  appear  here  as  counsel  for  the 
New  York  Produce  Exchange. 

The  Chairman.  Proceed  with  your  statement.  We  shall  be 
very  glad  to  hear  you. 

Mr.  Kernan.  You  know  this  subject  is  one  to  which  a  man 
may  devote  a  good  deal  of  his  time,  day  and  night,  and  then  feel 
that  he  has  not  very  greatly  succeeded;  but  I  shall  endeavor  to  be 
brief. 

I  am  here  to  say  that  since  the  passage  of  the  Interstate  Com- 
merce Act  I  have  given  much  thought  and  study  to  the  operations 
of  that  law.  1  was  the  first  chairman  of  the  New  York  State  Rail- 
road Commission,  serving  in  that  capacity  from  1883  to  1887,  when 
I  resigned.  Since  then  I  have  been  engaged  in  a  great  many  cases 
brought  before  the  Interstate  Commerce  Commission,  representing 
the  Produce  Exchange  and  others,  and  that  duty  has  led  me  to  give 
thought,  study,  and  investigation  to  the  question. 

NEED  OF  LEGISLATION  TO  INCREASE  EFFICIENCY  OF  COM- 
MISSION AND  HASTEN  REMEDY  AGAINST  UNJUST  RATES. 

We  think  that  the  Nelson-Corliss  bill,  with  some  amendments 
and  perhaps  additions,  is  one  that  meets  the  recognized  necessities 
of  the  situation,  that  something  should  be  done.     If  the  Interstate- 

3 


34 

Commerce  Law  is  to  be  continued  as  the  policy  of  the  Government 
for  the  purpose  of  regulating  the  relations  between  the  carriers  and 
the  people,  something  must  be  done  to  increase  the  efficiency  of 
the  orders  made  by  the  Commission  after  investigation,  and  to  facil- 
itate and  hasten  the  remedy  when  rates  are  found  to  be  unjust  and 
unreasonable. 

The  difficulty  we  have  got  to  think  about  and  the  difficulty  that 
this  bill  needs  to  remedy  is  the  relation  of  rates  to  the  competition 
between  business  men.  I  do  not  care  whether  the  rate  from  New 
York  City  to  Chicago  on  my  freight  is  50  cents  per  hundred,  60 
cents,  or  75  cents.  But  I  do  very  much  care  that  upon  my  freight 
reaching  my  customer  in  Chicago  the  relation  of  my  competitor's 
rights  to  mine  shall  be  relatively  fair,  that  one  man  shall  have  no 
more  advantage  in  Chicago  than  I  have. 

This  can  only  be  secured  by  a  body  having  power  to  take  in 
hand  the  actual  situation  and  investigate  in  reference  to  it.  The 
remedies  proposed  by  this  individual  man  or  that  individual  man 
have  ceased  to  be  of  use,  as  applied  to  this  situation,  where  the 
great  question  between  all  the  manufacturers  and  business  men  of 
the  country  is  not  as  to  just  how  much  they  pay,  but  that  their 
relations  to  their  competitors  in  reaching  common  markets  shall  all 
be  fair  and  just. 

The  Chairman.  Section  16  of  the  law  of  1887,  the  original  In- 
terstate Commerce  Act,  formerly  overlooked,  has  been  interpreted 
by  Judge  Groscup,  where  they  w^ere  unable  to  punish  shippers  and 
carriers  for  violating  the  law  as  to  rebates  or  discriminations. 

Mr.  Kerxax.  Under  that  act  the  shippers  could  not  be  pun- 
ished at  all,  whereas  they  ought  to  be  punished  just  as  well  as  the 
railroads. 

The  Chairmax.     The  present  law  is: 

That  whenever  any  common  carrier,  as  defined  in  and  subject 
to  the  provisions  of  this  act,  shall  violate,  or  refuse  or  neglect  to 
obey  or  perform,  any  lawful  order  or  requirement  of  the  Commis- 
sion created  by  this  act,  not  founded  upon  a  controversy  requiring 
a  trial  by  jury,  as  provided  by  the  seventh  amendment  to  the  Con- 
stitution of  the  United  States,  it  shall  be  lawful  for  the  Commission, 
or  for  any  company  or  person  interested  in  such  order  or  require- 
ment, to  apply  in  a  summary  way,  by  petition,  to  the  circuit  court 
of  the  United  States. 

I  want  to  draw  your  attention  to  that.  It  seems  now  that  the 
provisions  of  section  16  had  been  overlooked,  limiting  the  power 
to  compel  all  railroads,  whether  in  associations  or  not.  to  observe 
the  fixed  rates  and  maintain  them,  by  injunction  on  petition  to  the 
circuit  court  of  the  United  States  in  equity.  Has  your  attention 
been  drawn  to  that  decision? 

Mr.  Kernan.     I  know  that  decision. 

The  Chairman.     Have  you  anything  to  say  on  that  point? 

OWING  TO  THE  DELAYS  IN  FEDERAL  COURTS  DECISIONS  ARE 

PRACTICALLY  USELESS. 

Mr.  Kerxan.  As  to  wiiether  that  gives  us  sufficient  remedy? 
It  is  partial  only.    You  will  find  that  this  is  the  present  condition 


35 

aud  difficulty:  That  owing  to  the  methods  of  United  States  courts, 
the  delays,  the  waiting,  practically  you  can  not  get  anything  de- 
cided in  time  to  be  of  use. 

Take,  for  instance,  the  import-rate  case  that  I  carried  through 
for  the  New  York  Board  of  Trade  and  Transportation  before  the 
Interstate  Commerce  Commission,  involving  a  very  important  ques- 
tion, the  question  whether  the  rate  upon  imports  should  be  the 
same  as  the  domestic  rate  between  the  seaboard  and  interior  points 
or  whether  it  should  be  lower.  'It  also  involved  the  same  question 
as  to  exports,  whether  there  could  be  a  lower  export  rate  than  the 
domestic  rate  to  the  seaboard,  in  order  to  meet  the  conditions  of 
foreign  markets.  All  the  trunk  lines  made  defense  before  the  Com- 
mission. It  took  a  year  and  a  half  to  get  that  case  through  the 
Interstate  Commerce  Commission.  We  took  a  great  deal  of  testi- 
mony and  heard  everybody. 

The  Commission  finally  made  an  order  in  our  favor,  and  eigh- 
teen railroads,  including  the  great  trunk  lines,  obeyed  the  order; 
one  or  two  disobeyed  it.  Then  I  took  the  case  to  the  United  States 
court  in  1892;  it  was  expedited  and  carried  through  the  circuit  court 
of  appeals,  and  then  to  the  Supreme  Court.  After  the  first  argu- 
ment before  the  Supreme  Court  they  ordered  a  reargument.  It  was 
reargued,  and  then  decision  was  delayed  for  sixteen  months.  It 
actually  took  four  years  and  a  half  to  get  a  decision  of  that  ques- 
tion. 

This  shows  that  this  question  of  whether  the  original  act  is  in 
force  is  a  ver^^  serious  one.  The  Commission  itself,  all  the  railroads, 
and  all  the  shippers  supposed  for  ten  years,  until  that  decision  was 
rendered,  that  Congress  had  given  the  Commission  all  the  power 
asked  for. 

In  that  import-rate  case,  how  was  it  decided  against  us?  I  had 
Wallace,  circuit  judge;  I  had  the  three  judges  unanimously  in  the 
circuit  court  of  appeals;  I  had  Harlan,  Brown,  and  the  Chief  Jus- 
tice in  the  Supreme  Court.  In  other  words,  I  had  seven  out  of  the 
twelve  judges  who  passed  upon  the  question  holding  that  power 
was  given.  But  five  happened  to  be  in  the  court  of  last  resort, 
where  they  could  finish  me,  and  so  it  was  decided  that  the  Interstate 
Commerce  Act  could  not  be  construed  as  containing  any  of  these 
powers.  So  you  see  it  has  been  a  pretty  close  question  among  law- 
yers and  judges  whether  this  act  did  not  originally  give  the  power 
which  ought  to  have  been  given. 

Another  thing  I  want  the  committee  to  remember,  bearing  upon 
the  danger  of  giving  to  a  commission  the  power  sought  here.  There 
has  never  been  a  decision  of  any  United  States  court,  where  the 
question  was  made,  that  the  order  of  the  Commission  was  not  de- 
cided to  be  intrinsically  fair  and  just,  so  far  as  the  amount,  the  rate, 
or  the  discrimination  was  concerned.  It  has  all  finally  turned 
simply  on  the  question  whether  the  Commission  had  the  power. 


36 


STATEMENT  OF  HON.  MARTIN  A.  KNAPP,  CHAIRMAN  OF  THE 

INTERSTATE  COMMERCE  COMMISSION,  BEFORE 

THE  HOUSE  COMIVHTTEE. 

Monday,  April  21,  1902. 

Mr.  Knapp.  Mr.  Chairman  and  gentlemen  of  the  Committee,  I 
am  very  much  obliged  to  you,  as  are  my  associates,  for  giving  us 
this  opportunity  to  express  our  views  respecting  the  various  legis- 
lative proposals  which  are  before  you. 

So  much  may  be  said  on  this  subject  that  I  hardly  know  where 
to  begin  or  what  comments  of  my  own  will  likely  be  of  most  service 
to  the  Committee. 

One  thing,  however,  I  am  disposed  to  say  at  the  outset.  Those 
who  do  not  want  the  Government  regulation  of  railway's  to  suc- 
ceed, those  who  do  not  want  and  do  not  intend  that  railways  shall 
be  subjected  to  any  actual  and  effective  control,  are  just  now  very 
bold  and  eager  in  declaring  that  this  law  needs  no  amendment,  that 
the  law  is  all  right  as  it  is,  and  all  that  is  necessary  is  for  the 
Commission  to  go  on  and  enforce  it  just  as  it  stands. 

THE  PRESENT  LAW  DEFECTIVE  AND  UNWORKABLE. 

Now,  of  course,  talk  of  that  sort  deceives  no  one  who  is  familiar 
with  the  facts  or  has  any  knowledge  of  the  actual  situation.  This 
law  is  defective.  In  some  important  respects  it  is  practically  un- 
workable. The  great  principles  which  are  embodied  in  it  are  sound. 
Its  purposes  are  wholesome  and  beneficent,  but  the  machinery  pro- 
vided for  enforcing  those  principles  and  realizing  these  purposes 
was  never  sufficient;  some  of  it  has  broken  down,  and  it  is  sadly  in 
need  of  renewal  and  repairs. 

I  suppose  that  any  scheme  of  public  regulation  will  provide, 
as  the  present  law  provides,  that  all  carriers  subject  to  its  provi- 
sions shall  publish  the  rates  which  they  expect  to  charge  the  pub- 
lic. In  other  words,  that  there  shall  be  an  announcement,  through 
duly  published  tariffs,  of  the  rates  which  the  public  will  be  required 
to  pay. 

CARRIERS  WILL  CONTINUE  TO  EXERCISE  THE  INITIATIVE  IN 

RATE  MAKING. 

Under  the  present  law  the  carriers  exercise  without  restraint 
the  initiative  in  rate  making.  They  are  free  to  put  in  just  such 
tariffs  as  they  see  fit.  They  are  under  no  legal  restraint  whatever  in 
that  regard,  and  there  is  no  proposition  to  change  the  law  in  that 
respect.  I  do  not  advocate,  and  so  far  as  I  am  aware  no  member 
of  the  Commission  has  ever  advocated,  that  the  initiative  in  rate 
making  should  be  taken  away  from  the  carriers  and  given  to  the 
Commission  or  any  other  tribunal.  So  we  assume  that  whatever 
is  done  in  the  way  of  amending  the  present  law  will  not  in  any 
respect  change  this  provision  in  that  regard,  and  that  carriers  will 
continue  to  be  free  to  exercise  entirely  the  initiative  in  rate  making. 
They  will  be  free  to  put  in  just  such  tariffs  as  accord  with  their 
judgment  or  their  interests. 


37 


STATEMENT  OF  HON.  MARTIN  A.  KNAPP,  CHAIRMAN  OF  THE 
INTERSTATE  COMMERCE  COMMISSION— Continued. 

Wednesday,  April  23,  1902. 

Mr.  Chairman,  it  was  verv  jrratifying  to  me  on  Monday,  when 
your  chairman  suggested  that  your  committee  was  more  concerned 
just  at  present  considering  principles  of  railway  regulations  than  in 
discussing  details  of  particular  measures.  That  seems  to  be  a  rery 
wise  attitude.  We  should  at  first  decide  what  we  should  attempt  to 
accomplish,  and  when  we  have  decided  that  we  are  prepared  to  ex- 
amine the  particular  methods  proposed  for  realizing  our  purpose. 
At  the  same  time  the  discussion  may  be  so  discursive  as  to  be  un- 
profitable, and  if  we  get  very  far  beyond  the  range  of  any  legisla- 
tion proposed  we  are  liable  to  indulge  in  more  or  less  idle  specula- 
tion. 

So,  with  your  permission,  this  morning  I  shall  try  to  bring  the 
discussion  to  a  somewhat  more  definite  and  practical  basis. 

COMMISSION  DESIRES  SUCH  AMENDMENTS  AS  WILL  EFFECT 

THE   RESULTS   OBVIOUSLY   INTENDED   BY 

FRAMERS  OF  THE  ACT. 

In  the  ten  years  and  more  during  which  I  have  been  a  member 
of  the  Interstate  Commerce  Commission  I  have  endeavored  to  give 
careful  and  conscientious  study  to  the  problem  of  railway  legisla- 
tion. I  appreciate  its  difficulty;  T  think  I  understand  how  serious 
the  question  is  in  its  various  aspects.  My  experienec  and  reflection 
leads  me  to  be  very  conservative.  I  think  our  legislative  policy 
should  be  developed  by  evolution  and  not  by  revolution,  and  I  am 
not  at  all  disposed  to  advocate  any  very  radical  or  novel  addition 
to  the  present  laws  upon  this  subject.  Indeed,  I  think  all  the  Com- 
mission has  ever  recommended  to  Congress  is  that  such  changes  be 
made  in  the  present  act  as  will  enable  its  purpose  to  be  accom- 
plished and  will  permit  it  to  effect  the  results  upon  railway  opera- 
tions which  its  framers  obviously  intended. 

We  are  not  prepared,  in  my  judgment,  to  enter  upon  novel 
fields  of  legislation,  and  we  may  wisely,  for  the  time  being  at  least, 
confine  our  efforts  to  such  amendments  that  will  give  the  law  the 
strength  and  efficiency  which  it  was  supposed  to  have  when  it  was 
adopted.  Nor  am  I  aware  of  any  measure  pending  before  this  com- 
mittee which  goes  any  farther  than  that. 

There  is  a  radical  difference,  fundamental  in  its  nature,  be- 
tween measures  which  are  devised  to  secure  the  observance  of  rail- 
way tariffs  and  measures  which  are  designed  to  correct  those 
tariffs  when  they  are  found  to  be  in  violation  of  the  principle  of  this 
law. 

I  perfectly  agree  with  Commissioner  Prouty  that  railway  com- 
petition, as  it  has  existed  in  this  country,  is  gradually  and  surely 
disappearing.  I  do  not  think  it  can  be  relied  upon  in  the  future  as 
the  agency  which  shall  secure  reasonable  rates;  nor  do  I  believe 
that  it  ought  to  be  relied  upon. 


38 


WHAT  METHOD  SHALL  BE  PROVIDED  TO   CORRECT  A  RATE 
FOUND   TO    BE   EXCESSIVE    OR   DISCRIMINATIVE   BE- 
TWEEN  COMMUNITIES   OR  COMMODITIES. 

Bearing  in  mind  that  the  railroads  exercise  the  initiative  in 
rate  making;  that  thej  are  free  in  the  first  instance  to  put  in  just 
such  tariffs  as  thev  see  fit;  that  they  are  under  no  legal  restraint 
in  that  regard,  the  question  comes,  What  will  you  do  or  undertake 
to  do  in  providing  methods  by  which  that  tariff  rate  itself  can  be 
changed  if  it  is  found  to  be  excessive  or  unfairly  adjusted  as  be- 
tween different  communities  or  different  articles  of  traffic? 

That  is  the  question.  And  I  beg  to  say,  gentlemen,  that  that  is 
the  great  question,  because  as  anyone  must  see,  following  out  the 
suggestion  made  by  Commissioner  Prouty  yesterday,  the  railroad 
competition  which  has  produced  all  these  secret  arrangements,  the 
competition  without  which  these  secret  practices  would  not  occur, 
is  a  thing  that  is  not  much  longer  to  remain;  whether  restraint  is 
put  upon  that  competition  or  permitted  by  legislation  in  that  re- 
gard, or  whether  in  default  of  such  legislation  and  induced  power- 
fully by  the  existing  legislative  policy  of  the  country,  or  whether,  as 
the  result  of  the  natural  and  inevitable  tendency  there  is  to  be  a 
very  complete  railway  combination,  and  I  do  not  believe  there  is 
any  earthly  power  to  prevent  it.  Competition  between  different 
lines  of  railway  which  has  existed  and  which  has  had  its  influence 
upon  rates,  will,  to  a  very  great  extent,  disappear.  And  in  that  con- 
nection, I  need  not  enlarge  upon  the  very  suggestive  statements  of 
Commissioner  Prouty  yesterday. 

COMPETITION  BETWEEN  MARKETS  A  PARTIAL  CORRECTIVE. 

I  may,  however,  if  you  will  bear  with  me,  allude  to  one  matter 
that  is  very  important  in  that  connection.  I  said  on  Monday  that 
I  thought  you  would  be  surprised  upon  examination  to  find  how 
slight  and  inconsequential  has  been  the  reduction  in  tariff  rates  in 
this  country,  say  in  the  last  ten  years,  which  can  be  attributed  to 
railway  competition.  There  is  a  form  of  competition,  however, 
which  has  a  very  powerful  influence  upon  tariff  rates  and  upon  at- 
tainable rates,  and  that  competition  will  continue  for  a  long  time 
to  come.  That  is  the  competition  of  the  markets.  Chicago  origi- 
nates an  immense  traffic;  so  does  St.  Louis.  The  carriers  leading 
from  Chicago  need  that  traffic  for  the  revenue  it  secures.  The  car- 
riers from  Chicago  therefore  have  got  to  make  a  rate  as  compared 
with  rates  from  St.  Louis  which  will  enable  the  Chicago  man  to 
do  business,  for  the  railroads  are  just  as  anxious  to  get  the  traffic 
as  the  merchant  is  to  sell  his  goods,  and  that  is  a  thing  that  is 
going  on  all  over  the  country. 

New  York  and  Philadelphia  and  other  cities  on  the  Atlantic 
seaboard  are  competing  for  the  enlarging  marget  south  of  the  Ohio 
and  Potomac  rivers,  and  Chicago  and  Milwaukee  and  other  cities 
in  the  Middle  West  are  also  eager  to  secure  the  trade  of  that  same 
territory,  and  the  lines  which  lead  from  one  section  of  the  country 


39 

in  that  consuming  territory  and  from  the  other  section  of  the  coun- 
try are  not  likely  to  be  confederated,  and  if  they  could  be  it  would 
not  be  of  any  advantage  to  either  of  them;  and  the  pressure  of  the 
producing  public  to  sell  the  goods  and  the  competition  between 
sellers  in  the  consuming  markets  has  a  very  powerful  control  upon 
obtainable  rates.  That  influence  of  course  is  to  remain  with  us. 
But  the  influence  of  mere  railway  competition,  the  mere  rivalry  of 
the  carriers  themselves,  is  a  thing  we  can  no  longer  rely  upon. 

WILL  CONGRESS  PROVIDE  ANY  WAY  BY  WHICH  INJUSTICE  IN 
RAILWAY  RATES  CAN  BE  CORRECTED? 

Now,  I  say,  the  carriers  are  to  go  on  as  now  exercising  the 
initiative  of  rate  making,  and  whether  separate  and  independent  or 
combined  and  confederated,  whether  controlled  by  different  boards 
of  management  or  practically  dominated  by  one  or  two  men,  they 
will  still  be  under  no  legal  restraint,  in  the  first  instance,  to  es- 
tablish and  impose  just  such  tariff  rates  as  are  induced  by  their 
interest.  And  in  that  state  of  things  the  question  comes — gentle- 
men, it  is  a  question  for  you  a  great  deal  more  than  it  is  for  me, 
vastly  more  for  you;  your  responsibility  far  exceeds  mine — the  ques- 
tion for  you  is :  Will  you  provide  any  way  by  which  when  the  com- 
bined railroads  of  the  country  publish  a  tariff  and  impose  it  upon 
all  shippers  the  question  of  the  reasonableness  of  that  tariff  will 
be  open  to  consideration,  and  if  it  is  found  to  be  excessive  or  to  be 
unfairly  adjusted  as  between  different  communities  that  there  shall 
be  some  way  by  which  the  injustice  can  be  corrected?  That  is  your 
question,  gentlemen. 

For  myself,  so  far  from  coveting  authority,  T  should  shrink  from 
the  responsibility  involved  in  its  exercise.  So  far  as  my  personal 
effort  is  concerned,  if  I  shall  remain  a  member  of  the  body  to  which 
I  belong,  I  should  feel  much  less  strain  under  the  law  as  it  now 
is  than  under  one  which  added  to  the  actual  authority  of  the  Com- 
mission; because  it  is  a  very  great  responsibility  to  assume.  But 
it  is  a  question  of  the  most  vital  public  interest.  It  is  a  question 
which  comes  directly  to  the  lawmaking  branch  of  the  Government. 
It  is  for  you  to  say,  gentlemen,  not  for  me.  It  is  for  3'ou  to  say 
whether  the  tariff  rates  which  the  combined  railway  interests  of 
this  country  see  fit  to  publish  and  impose  upon  the  public  shall  be 
subjected  to  any  actual  control.  If  not,  leave  the  law  as  it  is;  if 
otherwise,  then  you  must  make  some  change  in  it. 

THE   PROPOSED   BILL   WOULD    PUT   THE   LAW   JUST   WHERE 
EVERYBODY  SUPPOSED  IT  WAS  WHEN  PASSED. 

That  brings  me  to  speak  briefly  about  the  changes  proposed  in 
this  regard  by  the  bill  before  us.  Let  me  say  again  that  I  am  not 
advocating  any  radical  alteration  in  our  laws,  any  great  reach  of 
authority  by  the  Commission.  I  undertake  to  say  that  the  changes 
which  would  be  effected  by  the  adoption  of  the  Corliss  bill,  as  far 
as  it  relates  to  the  matter  I  am  now  discussing,  would  only  put  the 
law  just  where  everybody  supposed  it  was  when  passed.  For  ten 
years  the  Commission  charged  with  the  administration  of  this  law 


40 

— from  1887  to  1897 — assumed  that  it  had  authority  to  do  every- 
thing which  this  Corliss  bill  would  permit  it  to  do.  And  there  are 
two  things  I  might  say  in  that  connection. 

When  everybody  believed  that  there  was,  there  was  no  such 
outcry  against  the  danger  arising  from  the  Commission  exercising 
this  authority,  and  when  everybody  believed  that — and  I  venture 
to  address  this  particularly  to  Mr.  Mann — the  Commission  was  not 
overwhelmed  with  a  vast  number  of  complaints;  they  did  not  ex- 
ceed in  number  the  ability  of  the  Commission  to  dispose  of;  nor  do 
I  believe  that  the  changes  proposed  by  this  bill  would  result  in 
flooding  the  Commission  with  a  vast  number  of  complaints. 

Mr.  Mann.  It  would  if  we  can  take  any  criterion  from  the 
statements  made  by  the  witnesses  we  have  had  before  us. 

Mr.  Knapp.  I  would  answer  that  in  this  way,  Mr.  Mann.  If 
you  reason  from  the  answers  of  the  witnesses  before  the  Cullom 
committee  in  188G,  before  this  law  was  passed,  you  would  have  been 
equally  warranted  in  saying  that  when  that  law  was  passed  the 
Commission  would  be  flooded  with  complaints;  but  the  law  was 
passed  and  the  flood  did  not  come.  There  are  complaints,  quite 
numerous  complaints,  and  many  of  them  are  important,  but  I  do 
not  think  it  is  at  all  beyond  the  ability  of  a  capable  Commission  to 
dispose  of  every  complaint  which  would  come  up,  with  reasonable 
promptness.  , 

Mr.  Mann.  Of  course,  I  have  heard  the  statement  made  a  great 
many  times  that  for  the  first  ten  years  everybody  believed  that  the 
Commission  had  power  to  fix  rates.  My  recollection  is  that  the  Con- 
gress that  passed  the  act  did  not  believe  they  were  giving  such  au- 
thority. The  act  does  not  confer  any  such  authority,  and  the  rail- 
roads have  generally  denied  that  any  such  authority  existed.  What 
the  fact  may  be  I  do  not  know;  I  question  very  much  whether  every- 
body believed  it. 

Mr.  Knapp,  I  think  I  was  careful  not  to  say  that  everybody 
believed  it.  I  spoke  of  the  general  popular  understanding.  And 
let  me  say  now,  in  support  of  that,  that  in  the  complaints  which 
were  filed'  before  the  Commission — I  am  speaking  now  of  formal 
complaints  which  under  this  law  may  be  served  on  the  carrier  and 
which  can  only  be  investigated  after  notice  and  full  hearing — and 
which  they  were  required  to  answer — not  one  of  them  in  answering 
set  up  the  want  of  authority  on  the  part  of  the  Commission  to  grant 
the  relief  sought  by  the  complainants. 

Mr.  Mann.  Did  not  those  petitions  invariably  declare  that  the 
rate  was  unreasonable? 

Mr.  Knapp.  Yes;  and  in  many  cases  asked  for  a  specific  re- 
duction. More  than  that,  Mr.  Mann.  When  the  Commission  took 
proceedings  in  the  courts  to  enforce  orders  which  had  been  disre- 
garded in  the  respect  I  am  now  considering,  which  is,  as  you  know, 
by  suit  brought  for  that  purpose,  based  on  the  Commission's  findings, 
and  the  carriers  answered  to  this,  they  did  not  then  set  up  the  want 
of  authority  on  the  part  of  the  Commission  to  enforce  the  order 
which  was  sought  to  be  enforced  by  the  proceedings,  and  the  ques- 
tion was  not  raised  until  nearly  ten  years  after  the  Commission  was 
organized,  and  was  not  decided  until  along  in  the  year  1897,  and 


41 

then  iu  a  case  which  involved  other  questions  and  in  an  opinion 
which  left  much  room  for  doubt  as  to  what  the  Supreme  Court 
would  say  when  the  precise  question  came  before  it.  That  is  the 
actual  history  of  the  thinjj. 

Let  me  say  further,  Mr.  Maun,  in  the  first  eight  months  after 
the  (Commission  was  organized,  when  one  of  the  most  eminent 
jurisits  this  country  ever  produced,  Judge  Cooley,  was  its  chairman, 
the  Commission  made  orders  which  in  principle  and  in  terms  cov- 
ered every  order  which  the  Commission  could  make  under  this  Cor- 
liss bill. 

Mr.  Mann.  It  has  been  stated  that  Judge  Cooley  did  not  be- 
lieve that  the  Commission  had  authority  to  make  rates. 

Mr.  Knapp.     I  know  it  has  been. 

Mr.  Mann.  I  said  did  not  ''believe."  I  should  have  said  "de- 
cided" that  the  Commission  did  not  have  authority  to  make  rates. 

Mr.  Knapp.  I  do  not  think  Judge  Cooley  is  on  record  as  say- 
ing that.  I  had  the  honor  to  be  associated  with  him,  to  my  great 
advantage,  for  some  months  upon  the  Commission — in  my  first 
service  with  the  Commission — and  I  never  heard  him  say  that.  I 
know  he  joined  in  decisions  where  that  authority  was  exercised. 

Mr.  Mann.     You  know  that  claim  is  made? 

Mr.  Knapp.  Oh,  yes;  do  not  misunderstand  me;  I  am  not  for 
a  moment  pretending  that  the  law  was  clear  in  that  respect,  and 
I  am  not  implying  the  slightest  criticism  upon  the  Supreme  Court 
of  the  United  States. 

Mr.  Mann.  I  understand;  it  is  a  question  of  what  the  Com- 
mission actually  did. 

Mr.  Knapp.  On  the  contrary,  I  think  the  Supreme  Court  has 
correctly  construed  the  law  as  a  matter  of  statutory  provision. 
There  are  one  or  two  questions  not  relating  to  the  question  I  am 
now  discussing  on  which  I  am  not  able  to  bring  my  mind  into  har- 
mony with  the  decision  of  the  court;  but  so  far  as  its  decisions  af- 
fect the  question  I  am  now  discussing  I  am  bound  to  say  that  as 
interpretations  of  the  statute  the  decisions  are  well  grounded.  And 
I  am  only  suggesting,  not  that  the  Supreme  Court  is  wrong,  but 
that  this  law  ought  to  be  corrected — can  wisely  be  corrected  so  far 
as  to  give  the  authority  which  was  popularly  supposed  to  be  in- 
vested in  the  Commission. 

I  will  add,  Mr.  Mann,  that  while  the  statute  is  vague  and  un- 
certain and  had  to  be  settled  by  the  Supreme  Court,  some  of  the 
ablest  lawyers  in  the  country  are  on  record  in  written  opinion 
affirming  that  the  Commission  had  the  authority  which  it  attempted 
to  exercise  during  that  period. 

Mr.  Mann.  You  know  a  lawyer  will  give  an  opinion  on  any 
subject  or  any  side  of  any  subject  if  you  get  the  right  one. 

Mr.  Knapp.  I  have  no  doubt  you  are  as  familiar  with  that 
question  as  I  am,  Mr.  Mann.  What  is  proposed.  Now,  let  us  see 
for  a  moment  just  what  it  is  proposed  to  do.  Let  me  put  it  in  this 
way.  The  Congress  has  absolute  power.  The  Supreme  Court,  as  far 
back  as  1825,  gave  to  the  commerce  clause  of  the  Constitution  the 
broadest  possible  construction.  It  affirmed  on  that  early  date,  and 
has  repeated  the  affirmation  many  times  since,  that  the  power  given 


42 

to  Congress  by  the  commerce  clause  is  plenary  and  exclusive,  and 
that  it  is  subject  to  no  limitations  whatever  except  sueh  as  are  found 
in  the  Constitution  itself.  And  they  decided,  further,  away  back  in 
that  early  day,  that  that  power  extends  not  only  to  the  subjects  of 
commerce  but  to  all  agencies  and  instrumentalities  by  which  that 
commerce  is  carried  on.  So  that  not  only  the  things  shipped  but 
every  appliance  which  is  used  for  that  transportation  is  completely 
and  absolutely  in  the  control  of  the  Federal  Congress. 

No  one  is  proposing  that  the  legislative  power  of  Congress 
shall  be  transferred  to  the  Interstate  Commerce  Commission.  That 
would  be  an  absurdity.  Kow,  w'hat  is  it  that  is  proposed?  That 
some  portion  of  that  authority  be  delegated,  and  under  specific  con- 
ditions. For  example,  the  Commission  can  to-day  make  no  order 
which  even  condenms  an  existing  rate  until  a  complaint  has  been 
filed,  until  a  complaint  has  been  served  on  the  carrier,  until  there 
has  been  an  investigation  upon  notice  with  full  opportunity  to  dis- 
close all  the  reasons  for  maintaining  that  rate.  If  the  Commission 
should  to-morrow  make  an  order  declaring  any  railroad  rate  to  be 
unreasonable  without  such  a  petition  and  without  such  an  investi- 
gation, the  courts  of  course  would  refuse  to  enforce  it.  and  say 
that  the  Commission  had  not  any  authority  to  make  it.  That  is  too 
obvious  for  discussion. 

Mr.  Richardson.  Eight  there;  you  say  you  can  not  now  insti- 
tute any  proceedings  without  a  complaint.  Do  you  propose  to  give 
authority  to  the  Commission  to  go  forward  and  institute  proceed- 
ings without  a  complaint? 

Mr.  KxAPP.  No.  On  the  contrary,  I  am  very  much  opposed  to 
that.  While  some  States  have  gone  to  that  extent,  I  think  it  would 
be  very  unwise  for  the  Congress  to  undertake  that  by  direct  legis- 
lation or  by  any  power  to  delegate  that  to  the  Commission. 

Mr.  Manx.  I  have  wanted  to  ask  you  a  question  in  reference 
to  that.  If  a  petition  is  presented  under  your  practice  complaining 
of  a  particular  rate,  what  you  do  you  do  if  you  find  that  you  want 
to  extend  your  order  further  than  is  suggested  in  the  petition? 
Suppose  a  complaint  is  made  by  one  city  against  a  rate,  and  that  is 
all  that  is  referred  to;  but  that  involves  the  rate  to  another  city. 

COURSE  OF  PROCEDURE  BEFORE  THE  COMMISSION. 

Mr.  Knapp.  Perhaps  I  can  best  answer  that,  most  intelligently 
answer  it,  by  describing  briefly  what  actually  happens.  Now,  in 
many  cases  where  a  community  feels  aggrieved,  either  because  it 
says  that  all  the  rates  it  pays  are  too  high  or  because  it  conceives 
itself  to  be  prejudiced  because  some  rival  community  gets  more 
favored  rates,  frequently  a  competent  lawj'er  is  employed  in  the 
first  instance  who  prepares  a  petition,  such  as  is  contemplated 
under  the  present  law,  a  petition  which  is  ample  in  all  respects, 
which  sets  forth  the  facts,  gives  the  nature  of  the  grievance,  the 
relief  which  is  demanded,  and  which  is  believed  by  them  to  be  jus- 
tified. In  such  a  case  as  that  the  Commission  on  receiving  the  com- 
plaint files  it,  and  thereupon  serves  a  copy  to  the  carriers,  which 


43 

are  made  defendants  in  the  proceedings,  and  requires  them  to  an- 
swer ordinarily  within  twenty  days,  and  when  their  answers  have 
come  in,  then  the  case  is  at  issue;  it  is  like  any  suit  in  equity.  And 
then  the  time  and  place  is  fixed  for  hearing. 

Then  the  parties  appear,  produce  their  witnesses,  and  they  are 
sometimes  cross-examined,  and  the  fullest  opportunity  given  to 
both  sides  to  disclose  all  the  facts  which  bear  upon  the  particular 
grievance  presented  by  the  complaint;  and  then  the  Commission 
decides.    That  is  a  very  common  thing. 

But  it  very  often  happens  that  complaints  come  to  us  in  the 
form  of  letters,  or  they  are  drawn  by  some  business  man,  or  some 
lawyer  who  is  not  familiar  with  this  law,  and  they  are  incorrectly 
drawn.  The  facts  are  not  properly  stated.  They  fail  to  allege,  per- 
haps, the  jurisdictional  facts;  they  may  fail  to  make  all  the  carriers 
who  are  interested  in  the  rate  parties  in  the  case.  Now,  when  u 
complaint  of  that  kind  is  received  we  do  not  file  it  as  a  matter  of 
course.  We  take  it  up  with  the  parties  by  correspondence,  and  ex- 
plain that  if  they  wish  to  present  the  grievance  their  complaint 
needs  to  be  amended,  and  possibly  other  railroads  brought  in.  In 
other  words,  we  aim  to  avoid  all  technicalities  and  not  hear  a  case 
by  testimony  and  documentary  proofs  until  there  is  a  complaint 
served  upon  the  carriers  which  apprises  them  fully  and  fairly  and 
gives  them  every  opportunity  to  defend  a  rate  which  is  assailed. 

Mr.  Richardson.  Do  you  not  think  it  would  be  a  better  plan, 
according  to  the  rule  in  all  courts,  to  let  them  get  up  their  whole 
case,  instead  of  the  judges  helping  them? 

Mr.  Knapp.  Well,  Mr.  Representative,  these  are  not  complaints 
of  individuals,  and  you  must  bear  in  mind  all  the  while  that  any 
order  that  is  made  affects  everybody  as  well  as  the  complaining 
party. 

Mr.  Richardson.  But  bear  in  mind  this,  also,  that  a  judge  who 
fixes  up  the  amendment  and  so  on  is  likely  to  sustain  it. 

THE  COMMISSION  AN  ADMINISTRATIVE  BODY. 

Mr.  Knapp.  Judges  are  holding  court  to  settle  disputes  be- 
tween individuals.  The  Commission  is  not  a  court.  It  is  an  admin- 
istrative body.  It  is  charged  with  the  administration  of  a  law. 
It  is  the  duty  of  the  Commission  to  use  every  proper  method  of  real- 
izing as  far  as  possible  the  purposes  of  that  law  and  administrating 
it  in  the  interests  of  justice  and  not  in  the  interest  of  individuals, 
and  I  do  not  think  the  plan  which  the  Commission  adopts  is  open 
to  any  criticism.   I  think  it  is  a  fair  and  honest  one. 

Mr.  Richardson.  Then  it  would  be  equally  fair  to  give  the  rail- 
road the  opportunity  of  any  suggestion  in  their  answer? 

Mr.  Knapp.    Oh,  they  have  the  opportunity. 

Mr.  Richardson.  You  make  the  same  suggestions  to  the  rail- 
roads? 

Mr.  Knapp.    They  make  their  answer,  of  course. 

Mr.  Richardson.  They  generally  have  competent  and  able  law- 
yers; there  is  no  trouble  about  that. 

Mr.  Knapp.     Surely. 


44 


THE  COMMISSION   CAN  MAKE  ONLY   SUCH  AN   ORDER  AS  IS 
JUSTIFIED  BY  THE  FACTS  PROVEN  UPON  INVESTI- 
GATION OF  FORMAL  COMPLAINT. 

Now,  not  only  can  the  Commission  make  no  order  until  such  a 
complaint  has  been  filed,  served  on  the  carriers,  answered  by  them, 
and  the  issue  tried,  but  it  can  only  make  such  an  order  as  is  justi- 
fied by  the  facts  proven.  The  Commission  has  jio  arbitrary  power 
to  make  rates.  It  can  not  act  in  any  ex-parte  or  ex-cathedra  man- 
ner. You  gentlemen  can  pass  a  law  and  fix  the  rates  on  grain  from 
Chicago  to  New  York  without  giving  anybody  a  hearing;  it  be- 
comes the  law  of  the  land.  We  are  not  proposing  that  the  Com- 
mission shall  do  anything  of  that  kind,  and  it  is  assumed  that  all 
the  safeguards  which  are  now  provided  shall  be  continued  and  that 
the  Commission  shall  have  no  authority  to  even  condemn  the  rates 
which  carriers  themselves  establish,  except  upon  a  complaint  in- 
vestigated after  the  necessary  and  full  hearing.  That  is  all  that  is 
proposed. 

THE   CRUCIAL   QUESTION— SHALL    THE    COMMISSION    HAVE 
AUTHORITY  TO  CORRECT  A  RATE  FOUND  TO  BE  WRONG? 

Now  you  come  to  the  crucial  question:  Shall  the  Commission 
have  any  more  authority  in  such  a  case  than  simply  to  say  this  rate 
that  is  complained  of  is  wrong  and  you  must  stop  charging  it,  or 
shall  the  Commission  in  such  case  have  authority  to  name  the  rate 
which  it  thinks  should  be  substituted  in  the  future  for  the  one  thus 
condemned?  That  is  all  there  is  of  it.  Now,  at  present,  since  the 
decision  of  the  Supreme  Court,  of  course  our  decisions  have  con- 
formed to  that  construction  of  the  statute;  and  when  a  complaint 
is  made  that  a  rate  is  excessive,  and  that  has  been  served  on  the 
carriers,  and  that  has  been  answered,  there  has  been  a  trial  of  the 
whole  question,  with  every  facility  and  opportunity  to  show  all  the 
facts  which  bear  upon  the  question.  All  the  Commission  can  do 
now  is  to  say  if  it  so  finds  upon  the  facts,  if  it  is  warranted  in  so 
finding,  "This  thing  you  are  doing  is  wrong,  and  you  must  stop  it.'' 
That  is  all  we  can  say.  And  I  am  assuming  in  that,  Mr.  Mann,  that 
the  Supreme  Court  will  sustain  that  authority  whenever  the  precise 
question  comes  before  it. 

It  has  not  done  so  yet,  but  I  assume,  because  I  firmly  believe 
that  if  the  rate  complained  of  is  a  dollar  and  the  Commission  after 
this  inquiry  in  the  way  I  have  described  says  a  dollar  is  unreason- 
able and  therefore  violates  the  first  section  of  the  law  and  makes 
an  order  requiring  the  carrier  to  cease  and  desist  from  thereafter 
charging  that  rate — I  believe  the  Supreme  Court  will  affirm  the 
authoritv  of  the  Commission  to  make  such  an  order. 

Mr.  Mann.  I  should  say  that  the  opinions  of  the  Supreme 
Court  on  other  cases  left  that  as  clear  as  daylight  could  possibly 
leave  it. 

Mr.  Knapp.  I  had  not  supposed  that  there  was  any  doubt  about 
that. 

Mr.  Mann.    They  have  said  so  repeatedly. 


45 

Mr.  Knapp.  The  result,  of  course,"  is  that  after  all  this  elab- 
orate investigation,  which  may  consume  considerable  time  and  in- 
volve considerable  expense  to  the  parties,  the  Commission  can  go  no 
further  than  to  condemn  the  particular  thing  complained  of  with- 
out being  able  to  order  something  to  be  put  in  substitution  which 
shall  remove  the  grievance;  and  of  course,  in  such  a  case  as  I  have 
named,  if  we  could  condemn  a  rate  of  a  dollar,  the  order  of  the 
Commission  could  be  complied  with  by  making  that  rate  99^  cents. 

Now,  all  that  is  proposed  is  that  in  such  a  case  as  I  have  named, 
in  order  to  give  the  Commission  jurisdiction  at  all,  there  must  be  a 
formal  complaint  served  on  the  carriers,  opportunity  for  them  to 
answer,  and  a  full  hearing  conducted  with  all  the  formality  of  a 
judicial  inquiry.  Then  if  the  Commission  in  such  case  and  upon 
the  facts  thus  disclosed  reaches  the  conclusion  that  the  rate  in  ques- 
tion is  wrong,  it  shall  have  authority  to  name  the  rate  which  it 
thinks  would  be  right,  to  be  put  in  place  of  the  one  in  controversy. 

SCOPE  OF  AN  INVESTIGATION  AND  DETERMINATION. 

The  Chairman.  Under  the  practice  of  the  Commission  and 
under  the  law,  how  comprehensive  might  that  question  be;  could 
more  than  one  rate — that  is,  one  rate  on  one  article  between  two 
places — be  considered  at  the  same  time  under  this  procedure? 

Mr.  Knapp.    Undoubtedly. 

The  Chairman.    Or  could  there  be  grouped  many? 

Mr.  Knapp.  Undoubtedly.  All  the  rates  could  be  assailed  in 
one  procedure.    It  is  within  the  scope  of  the  bill. 

The  Chairman.    Then  there  may  be  more  than  one  party? 

Mr.  Knapp,  Surely.  It  is  ordinarily  the  case  that  a  complaint 
is  against  more  than  one  carrier. 

The  Chairman.  Then  in  that  event  in  one  action  and  as  the 
result  of  one  hearing  under  this  section  the  Commission  would  be 
authorized  to  fix  the  entire  rates  of  a  State,  possibly,  or  of  a  num- 
ber of  States,  a  group  of  States?  Is  that  your  judgment? 

Mr.  Knapp.  I  think  I  mav  sav  that  that  would  be  within  the 
possible  scope  of  the  measure,  but  I  do  not  see  how  that  could  prac- 
tically occur,  because  no 

The  Chairman.  Give  us  some  idea  of  the  extent  to  which  it 
might  occur  in  your  judgment,  or  probably  would  occur? 

Mr.  Knapp.  Well,  before  doing  that,  let  me  suggest  something 
which  I  think  should  be  kept  in  mind  on  this  branch  of  the  discus- 
sion. In  my  judgment,  it  is  one  thing  to  condemn  a  rate  simply  be- 
cause it  is  excessive,  and  it  is  quite  another  thing  to  condemn  a  rate 
because  it  is  discriminative. 

The  constitutional  rights  of  the  carriers  in  respect  of  their 
revenues  would  only  permit  the  reduction  of  a  rate  where  no  ele- 
ment of  discrimination  enters  except  upon  satisfactory  proof  that 
their  revenues  under  the  rate  complained  of  were  greater  than  they 
were  entitled  to  receive,  and  that  the  reduced  revenue  which  the 
lower  rates  would  produce  would  still  be  all  that  they  would  be 
entitled  to  exact  from  the  public;  but  where  the  element  of  dis- 


46 

crimination  enters,  as  the  Supreme  Court  has  said,  neither  the  Con- 
gress nor  the  administrative  body  would  be  under  quite  the  same 
limitations,  because  the  carriers  have  no  right,  merely  for  the  pur- 
pose of  getting  more  revenue,  to  so  adjust  their  rates  as  to  unduly 
IJrejudice  one  community  or  give  a  rival  community  undue  ad- 
vantage. 

While  I  agree  with  what  Commissioner  Prouty  said,  that  the 
future  question,  the  question  the  country  is  coming  to  presently,  is 
the  question  of  the  reasonableness  of  the  general  basis  of  rates,  the 
questions  which  so  far  have  come  up,  excepting  the  recent  one 
which  has  grown  out  of  the  raising  of  rates  by  changes  in  chissiti- 
cation,  with  that  exception  the  complaints  have  more  generally 
been  complaints  of  discriminations  between  localities  or  between 
different  articles  of  traffic,  and  the  grievance  most  commonly  as- 
serted is  -a  grievance  of  that  kind. 

To  illustrate,  Mr.  Chairman,  the  Commission  conducted  an  in- 
vestigation some  four  or  five  years  ago  which  involved  great  in- 
terests, and  that  was  the  proper  differential  on  grain  originating, 
say,  at  Chicago,  as  a  typical  point,  to  Boston,  New  York,  Philadel- 
phia, Baltimore  and  Newport  News.  What  should  be  the  adjust- 
ment of  grain  rates — the  relation  of  grain  rates  from  a  common 
center  to  those  different  ports?  That  is  a  question;  but,  as  Commis- 
sioner Prouty  said  yesterday,  somebody  has  to  settle  it,  and  the 
question  is,  shall  the  carriers  be  free  to  settle  it  just  as  they  see 
fit,  no  matter  what  consequences  to  the  communities  or  to  indi- 
viduals may  result,  or  shall  public  authority  intervene  to  some  ex- 
tent and,  under  proper  restrictions,  control  in  a  degree  that  judg- 
ment? 

Bear  in  mind  another  thing,  gentlemen.  It  is  not  proposed  that 
an  order  of  the  Commission  made  after  this  careful  hearing  shall  be 
final.  The  bill  provides  that  any  carrier  can  go  to  court  to  ^et  rid 
of  it,  and  the  court  is  required  to  stay  it  unless  it  finds  that  that  is  a 
just  and  reasonable  and  lawful  order. 

Therefore,  before  any  rate  can  be  charged  under  this  Corliss 
bill  there  must  be  a  determination  of  the  Commission  reached  in 
the  careful  manner  I  have  described,  and  there  must  be  a  decision 
by  a  court,  made  at  the  instance  of  the  carrier,  that  that  is  a  just 
and  reasonable  and  lawful  order.   Now,  is  that  too  much? 

The  Chairman.  That  scarcely  answers  the  question.  I  wanted 
your  opinion  as  to  how  far  this  authority  might  be  exercised  in  a 
given  case.  Has  it  ever  occurred  that  the  entire  schedule  of  rates 
as  filed  by  a  company,  a  carrier,  has  been  in  their  entirety  assailed 
in  any  one  proceeding  before  you? 

Mr.  IvNAPr.  That  has  occurred  in  numerous  cases,  Mr.  Chair- 
man, but  only  (I  am  very  confident  that  I  am  correct)  in  those  cases 
involving  the  long  and  short  haul  clause. 

The  Chairman.  In  a  case  like  that,  where  there  was  a  sort  of 
blanket  charge  covering  the  whole  of  a  schedule,  and  the  entirety 
of  the  business  of  a  carrier,  would  it  be  competent  in  that  kind  of 
a  case,  in  your  judgment,  under  the  authority  proposed  to  be  given 
by  this  bill,  for  the  Commission  to  make  an  entire  new  schedule  of 


47 

rates  covering  the  whole  of  the  business  of  that  corporation  so  far 
as  their  compensation  for  service  is  concerned? 

Mr.  Knapp.  I  am  not  perfectly  sure  that  I  apprehend.  Let 
me  see.  It  is  true  now,  as  I  said,  in  cases  which  involve  the  long 
and  short  haul  clause,  as  j'ou  gentlemen  all  know,  in  the  territory 
south  of  the  Ohio  and  Potomac  rivers  and  in  the  territory  west  of 
the  Missouri  Kiver,  there  is  a  very  general  system  of  making  rates 
under  which  there  is  a  lower  rate  to  the  distant  terminal  or  the 
basing  point  than  is  applied  to  intermediate  points. 

The  Chairman.  Waiving  that  question  of  the  long  and  short 
haul,  and  taking  this  subject  as  involved  under  that  kind  of  in- 
quiry or  complaint,  would  you  consider  a  general  charge  made  by 
a  citizen  that  involved  all  of  the  rates  of  a  complete  schedule  of  a 
railroad,  covering  its  whole  system,  if  they  had  made  such  a  sched- 
ule as  that,  or  would  you  require  a  specific  statement  of  just  the 
complaint  that  he  wanted  to  make  With  regard  to  some  particular 
charge?  It  would  be  in  the  nature  of  a  general  demurrer.  Would 
you  require  him  to  be  more  specific? 

Mr.  Knapp.  So  far  as  I  now  recall,  Mr.  Chairman,  no  com- 
plaint has  ever  challenged  the  entire  schedules  of  a  carrier  except 
for  discrimination,  either  under  the  long  or  short  haul  clause,  which 
is  the  common  type,' or  because  of  the  widely  different  rates  be- 
tween two  places,  at  about  the  same  distance  from  a  common  cen- 
ter. In  other  words,  in  every  instance  where  the  entire  schedule 
of  rates  has  been  challenged  it  has  not  been  for  inherent  unreason- 
ableness, but  for  its  discriminating  results,  and  the  bill  does  not 
change  the  present  law  in  that  regard  in  any  particular,  and  it  does 
not  change  the  fourth  section. 

"LONG  AND    SHORT    HAUL"    PROVISION    DIVESTED    OF  ALL 
VITALITY  BY  INTERPRETATION  OF  SUPREME  COURT. 

I  might  say  for  your  inforination  that  there  is  nothing  left  of 
the  long  and  short  haul  clause  of  the  present  law.  The  construction 
which  it  has  received  from  the  Supreme  Court  has  deprived  it  of  all 
vitality.  No  violation  of  the  long  and  short  haul  rule  ever  occurs 
except  because  of  competition;  and  the  Supreme  Court  has  held 
that  competition,  whether  the  competition  of  carriers  or  of  markets, 
or  what  not,  may  constitute  the  dissimilarity  of  circumstances  and 
conditions  which  justify  the  carrier  in  charging  more  for  the  short 
distance  than  for  the  long  distance. 

So,  as  that  fourth  section  has  been  construed,  it  might  as  well 
be  dropped  from  the  law.  In  my  judgment  we  can  do  nothing  under- 
the  fourth  section  to-day  w^hich  we  could  not  do  under  the  third 
section.  It  is  a  discrimination  between  localities.  The  specific 
type  of  the  discrimination,  the  higher  charge  for  the  shorter  dis- 
tance, which  most  people  assumed  was  to  be  separately  treated  or 
specially  treated  by  the  fourth  section,  is  unaffetced  by  that  section 
now  in  the  wav  it  has  been  construed. 


48 


STATEMENT  OF  HON.  MARTIN  A.  KNAPP,  CHAIRMAN  OF  THE 
INTERSTATE  COMMERCE  COMMISSION— Continued. 

Thursday,  April  24,  1902. 

Mr.  Knapp.  Mr.  Chairman  and  gentlemen,  before  proceeding 
with  my  argument  I  desire  to  make  a  word  of  comment  upon  some 
of  the  observations  made  by  my  esteemed  friend,  Mr.  Francis  B. 
Thurber. 

Inferences  drawn  from  the  average  rate  per  ton  per  mile  on 
all  trafltic  are  liable  to  be  very  misleading.  It  is  frequently  said 
that  railway  rates  in  the  United  States  are  not  half  what  they  are 
in  England.  That  is  true  only  when  you  compare  the  average  rate 
per  ton  per  mile  on  all  traffic  of  the  one  country  with  the  same  av- 
erage in  the  other  country.  Allow  me  briefly  to  explain  to  you  how 
the  average  rate  per  ton  per  mile  may  be  greatly  reduced  without 
any  change  at  all  in  the  rates  as  to  any  particular  shipment. 

Now  the  relative  amount  of  low-grade  freight  carried  in  this 
country,  like  ore,  coal,  etc.,  has  enormously  increased  in  the  last 
fifteen  years.  If  in  one  vear  vou  carrv  a  thousand  tons  of  first-grade 
freight  at  |1,  and  another  thousand  tons  of  sixth-class  freight  at 
20  cents,  the  average  rate  will  be  60  cents.  But  if  in  the  next  year 
you  carry  a  thousand  tons  of  first-class  freight  at  a  dollar,  and 
10,000  tons  of  sixth-class  at  20  cents,  the  average  rate  on  all  the 
traffic  will  be  more  than  cut  in  two  without  any  change  in  the 
rates  themselves.  Now  the  enormous  reduction  in  the  average  rate 
per  ton  per  mile  in  this  country  has  come  from  three  principal 
causes.  First  and  mainly,  the  enormous  increase  in  the  relative 
amount,  the  relative  tonnage,  of  these  low-grade  articles  which  are 
carried  at  a  low  price;  second,  there  has  been  from  the  beginning 
a  difference  between  carload  and  less  than  carload  rates,  and  in  the 
last  fifteen  years  there  has  been  an  enormous  increase  of  the  rela- 
tive proportion  of  the  traffic  carried  in  carloads  and  at  carload 
r-ates,  so  that  without  any  change  in  the  rates  themselves,  without 
reducing  the  cost  of  shipping  a  carload  of  100  pounds,  you  may  have 
an  average  reduction  in  the  average  rate  per  ton  per  mile  on  all 
traffic.  There  have  been  reductions  in  grain  to  some  extent,  in  iron 
articles,  and  in  other  commodities,  which  I  will  not  stop  to  mention, 
which  have  entered  into  the  reduction  of  the  average. 

When  you  speak  of  English  rates,  you  must  remember  that 
their  rates  include  cartage  at  both  ends.  An  English  carrier  goes 
to  the  warehouse  and  gets  the  stuff  and  transports  it  to  the  rail- 
road, and  when  it  arrives  at  its  destination  he  gets  it  and  transports 
it  to  the  place  of  the  customer.  Of  course,  that  enters  into  the  rate. 
Now,  I  ask  Mr.  Thurber  to  bear  in  mind  that  England  is  a  small 
■country,  and  that  it  is  seldom  that  traffic  moves  more  than  500 
miles  there,  and  taking  into  account  the  cartage,  I  ask  him  to  com- 
pare what  it  costs  a  man  in  New  York  to  deliver  dry  goods,  boots 
and  shoes  or  merchandise  of  any  class,  the  articles  in  which  the 
great  mass  of  people  are  interested — how  much  it  costs  him  to  effect 
the  movement  from  his  store  to  the  store  of  the  customer  as  com- 


49 

pared  to  the  cost  of  moving  the  same  articles  the  same  distance  in 
Enghmd,  and  I  think  that  he  will  be  very  much  surprised.  It  is 
not  very  so  much  lower  than  it  is  there. 

Mr.  Thurber.     How  is  it  with  other  countries? 

Mr.  Knapp.  There  is  no  country  that  is  as  low  as  the  United 
States. 

MILEAGE    COST    OF   MOVING   TRAFFIC    DIMINISHES    AS    THE 
DISTANCE  CARRIED  INCREASES. 

Now,  there  is  another  thing  that  is  to  be  taken  into  account. 
It  is  a  well-known  thing  in  railway  transportation,  and  water  trans- 
portation, too,  for  that  matter,  that  the  cost  per  unit  of  traffic 
moved  diminishes  with  the  distance  it  is  carried.  You  do  not  get 
twice  as  much  for  carrying  a  carload  1,000  miles  as  for  carrying  it 
.500  miles.  Our  traffic  is  carried  long  distances,  because  we  have 
a  great  big  country,  and  much  of  it  moves  2,000  and  even  3,000 
miles,  while  in  England  there  is  but  little  movement  that  exceeds 
500  miles,  so  that  my  suggestion  is  that  you  compare  the  ordinary 
cost  of  moving  the  ordinary  merchandise,  the  articles  in  which  the 
mass  of  the  people  are  interested,  the  same  distance  for  the  same 
service,  and  you  will  find  that  it  is  not  anything  like  twice  as  great 
in  England  as  it  is  in  the  United  States,  The  truth  is,  gentlemen, 
that  in  the  official  territory,  that  is  the  territory  north  of  the  Ohio 
and  the  Potomac  rivers  and  east  of  the  Mississippi,  the  most  popu- 
lous and  wealthy  part  of  the  United  States,  producing  the  greatest 
volume  of  traffic,  the  basis  in  making  rates  in  all  that  territory  is 
the  Chicago  rate.  Places  nearer  New  York  take  a  percentage  under 
the  Chicago  rates,  and  places  farther  than  Chicago  take  a  percentage 
over  the  Chicago  rate,  so  that  when  the  basis  of  New  York  and 
Chicago  is  reduced  there  is  a  corresponding  reduction  in  all  that 
territory. 

RATES  AS  HIGH  TODAY  AS  FIFTEEN  YEARS  AGO. 

Now,  the  class  rates  in  all  that  territory  on  the  six  classes  are 
just  as  high  to-day  as  they  were  fifteen  years  ago,  and  in  numerous 
instances  the  actual  rates  applied  have  been  increased  by  the  fact 
that  articles  have  been  advanced  in  their  classifications  to  take  a 
higher  rate.  Gentlemen,  I  did  not  mean  to  go  into  that.  I  just 
wanted  to  call  your  attention,  however,  to  the  fact  that  we  may  be 
very  much  misled  when  our  attention  is  called  to  the  extremely 
low  average  rate  per  ton  per  mile  on  all  traffic.  Why,  the  Chesa- 
peake and  Ohio  Railroad  shows  the  lowest  average  rate  per  ton 
per  mile  on  all  its  traffic  of  any  railroad  in  the  United  States,  and 
yet  everyone  knows  that  the  actual  rates  applied  to  merchandise, 
applied  to  the  articles  that  the  people  living  along  the  line  of  that 
road  are  interested  in,  are  very  much  higher  than  they  are  along 
the  New  York  Central  or  along  the  Pennsylvania  Railroad,  simply 
because  90  per  cent  of  the  traffic  of  the  Chesapeake  and  Ohio  is 
coal  and  ore,  and  that  it  is  of  course  carried  from  the  summit  where 
it  is  produced  both  ways  to  tide  water,  and  of  course  that  results  , 
in  a  very  low  average  rate  per  ton  per  mile  on  all  articles  on  that 
4 


50 

road,  and  yet  it  costs  more  to  haul  a  carload  of  boots  and  shoes  or 
clothinj;  or  any  of  the  articles  of  domestic  use  over  that  road  than 
it  does  over  the  New  York  Central. 

LOWER  RATES  ON  EXPORT  TRAFFIC  THAN  ON  DOMESTIC. 

In  order  that  I  may  not  forget  it,  I  want  to  make  another  ob- 
servation now.  If  I  understand  the  measures  which  are  pending; 
before  this  Committee,  and  I  have  endeavored  to  examine  them  with 
care,  there  is  not  a  sinj^le  one  of  them  which  proposes  to  change  the 
present  state  of  the  law  in  respect  to  allowing  a  rate  on  exports 
lower  than  on  domestic  traffic;  not  a  syllable. 

Mr.  Thurber.  It  proposes  to  give  the  power  to  the  Commis- 
sion, which  they  do  not  now  have,  and  that  might  enable  the  Com- 
mission to  decide  that  the  contention  of  our  local  New  York  mer- 
chants, that  they  should  pay  no  higher  than  the  proportionate  rate 
on  export  goods — than  the  people  who  export — might  be  sustained. 

Mr.  Knapp.  Let  me  see.  I  might  as  well  strike  at  that  ques- 
tion right  here  now.  I  want  you  to  bear  this  in  mind,  that  this  Com- 
mission, under  the  Corliss  bill  even,  can  make  no  order  except  an 
order  justified  by  the  sworn  testimony  before  it;  and  if,  in  a  pro- 
ceeding where  all  parties  have  an  opportunity  to  be  heard,  the  facts 
are  produced  and  the  testimony  is  presented  whicb  warrants  and 
justifies  a  conclusion  that  that  relation  between  domestic  and  ex- 
port rates  is  wrong,  then  it  ought  to  be  changed.  Now,  I  am  not 
saying  for  a  moment,  gentlemen,  that  domestic  traffic  should  al- 
ways be  carried  at  the  same  rate  as  export  traffic.  I  think  condi- 
tions arise  in  this  country,  have  arisen,  and  are  likely  to  arise  again, 
when  it  is  an  economic  advantage,  to  say  nothing  about  a  com- 
mercial benefit  to  the  people  of  this  country,  to  permit  these  sur- 
plus products  to  be  carried  abroad  at  rates  for  the  land  carriage  to 
the  seaport  which  are  less  than  the  rail  carriers  should  be  obliged 
to  accept  on  domestic  transportation. 

THE  EXTENT   OF  THE   PRESFNT  AUTHORITY    OF   THE    COM- 
MISSION. 

Now,  just  a  few  moments  on  the  other  question.  Let  us  see 
exactly  where  we  are  to-day.  Under  the  law  as  it  stands  the  Com- 
mission has  full  authority  to  receive  complaints.  It  may  serve 
those  complaints  upon  the  carrier  complained  of  and  require  it  to 
answer.  The  law  needs  no  alteration  in  that  regard.  The  jurisdic- 
tion of  the  subject-matter  is  as  broad  and  ample  as  the  case  re- 
quires. And  the  important  question  right  here  is  this,  it  is  in  very 
narrow  compass,  and  very  easily  stated,  and  it  is  a  question  which 
appeals  to  you  with  far  greater  gravity  than  it  does  to  me.  It  is 
just  this:  When  a  formal  complaint  is  made  in  the  manner  which 
the  law  now  provides,  that  a  given  rate  is  excessive,  or  that  its  en- 
forcement upon  everybody  effects  a  discrimination  against  one 
locality  and  in  favor  of  another,  and  the  carrier  complained  of  an- 
swers that  allegation,  and  the  Commission  then,  proceeding  with 
all  the  formality  of  a  judicial  inquiry,  takes  all  the  testimony  which 
either  side  has  to  offer  bearing  on  that  question,  what  order,  justi- 


51 

fied  by  that  disclosure  of  sworn  facts,  what  order  shall  the  Commis- 
sion be  authorized  to  make? 

That  is  all  there  is  of  it.  At  present  the  Commission  can  make 
simply  an  order,  if  the  facts  warrant,  condemning  the  rate  or  rate 
relation  complained  of,  and  requiring  the  carrier  to  cease  and  de- 
sist from  continuing  that  rate,  or  rate  relation^  and  that  is  all  the 
order  the  Commission  can  make.  I  am  speaking  now,  bear  in  mind, 
simply  of  the  authority  of  the  Commission. 

Now,  gentlemen,  if  you  are  content  to  leave  the  Commission 
with  only  that  degree  of  authority,  the  discussion  ends  at  this 
point. 

Mr.  Corliss.  It  is  not  binding  on  the  carrier,  after  the  order 
is  made? 

WHAT  ORDER  SHALL  THE  COMMISSION  BE  EMPOWERED  TO 

MAKE? 

Mr.  Knapp.  No,  sir;  that  is  another  question.  The  question 
now  is  only  in  such  a  case  as  this,  bear  in  mind;  the  jurisdiction 
to  make  an  order  is  dependent  upon  the  jurisdictional  facts  which 
are  contemplated  by  the  measure:  There  must  be  a  complaint,  there 
must  be  an  answer,  there  must  be  full  hearing,  and  the  order  can 
be  only  such  as  can  be  justified  by  those  facts.  Now,  what  order 
shall  the  Commission  have  authority  to  make?     That  is  all. 

The  Commission  can  simply  decide  what  the  truth  is  and  what 
ought  to  be  done  in  view  of  the  state  of  facts  actually  disclosed. 
Now,  if  you  are  satisfied — if  you  think  under  existing  conditions, 
with  practically  no  railway  competition,  that  the  authority  of  the 
Commission  shall  be  limited  to  a  mere  condemnation  of  the  thing 
complained  of,  and  that  it  shall  have  no  authority  to  say  what  thing 
shall  be  done  in  the  future  in  place  of  the  one  condemned,  then  the 
question  is  ended.  The  responsibility  is  upon  3'ou.  The  country 
perfectly  understands  what  the  Commission  can  do  and  what  it 
can  not  do.  If  you  do  not  want  it  to  do  any  more  than  it  can  do 
now,  then  the  law  should  not  be  changed  in  this  regard. 

THE   COURSE   PURSUED   BY   THE    RAILROADS    SINCE   THE 
SUPREME  COURT  DECISION. 

Mr.  Davis.  Have  there  been  numerous  instances  in  which  the 
railroads  have  declined  to  make  future  rates  upon  your  findings 
since  the  Supreme  Court  decision — where  they  have  ignored  find- 
ings or  decisions,  or  whatever  they  may  be  called? 

Mr.  Knapp.  Oh,  yes,  sir.  '^Numerous,"  of  course,  is  an  un- 
certain term;  but  there  are  frequent  instances  of  that  kind. 

Mr.  Davis.  Have  there  been  many  instances  in  which  the 
railroads  have  fixed  their  rates  for  the  future  on  what  you  have 
found  to  be  just  rates?    " 

Mr.  Knapp.  Some  instances  of  that  kind.  As  I  have  already 
explained,  for  ten  years,  or  until  the  Supreme  Coure  decided  other- 
wise, the  Commission  acted  upon  the  theory  that  in  such  a  case  it 
could  name  the  thing  to  be  done  in  the  future.  And  it  was  not  un- 
til January,  1807,  or  perhaps  later,  that  the  Supreme  Court  of  the 


52 

United  States  decided  that,  under  the  law  as  it  now  stands,  the 
Commission  had  no  authority  to  do  that. 

Since  that  interpretation  has  been  made,  and  under  circum- 
stances which  completely  cover  the  question,  the  Commission,  of 
course,  has  made  no  order  except  an  order  to  cease  and  desist  from 
the  thing  complained  of. 

The  Chairman.  Has  the  Commission  made  any  recommenda- 
tions accompanying  those  orders? 

Mr.  Knapp.  Yes,  sir;  I  was  about  to  say  that.  The  Commis- 
sion, without  any  authority  to  do  so  in  the  statute,  has  undertaken 
in  such  cases  to  express  its  judgment  as  to  the  thing  which  the  car- 
rier ought  to  do.  But,  of  course,  the  order  that  it  makes  goes  no 
further  than  to 

The  Chairman.  What  is  the  history  of  the  matter  with  refer- 
ence to  obedience  to  that  suggestion? 

Mr.  Knapp.  It  is  exactly  what  happens,  and  what  will  happen. 
In  several  cases,  decided  since  that  time,  the  carriers  have,  with 
reasonable  promptness,  made  changes  in  their  tariffs  so  as  to  make 
them  conform  to  the  recommendations  of  the  Commission.  In 
other  cases  they  have  simply  ignored  the  order  and  done  nothing. 

Of  course  you  gentlemen  understand  that  in  the  present  state 
of  the  law,  and  the  authority  of  the  Commission  merely  such  as  I 
have  described,  the  carrier  could  effect  a  technical  compliance  with 
that  order  by  making  only  a  nominal  change  in  the  rate  under  con- 
sideration, and  then  the  whole  thing  would  come  to  naught. 

THE  RAILROADS  HAVE  IGNORED  THE  ORDER  OF  THE  COM- 
MISSION TO  CEASE  AND  DESIST  FROM  CHARGING  A 
RATE  FOUND  TO  BE  UNJUST. 

Mr.  Mann.  Under  the  present  law,  you  have  authority  to  order 
them  to  cease  and  desist  from  charging  such  a  rate.  That  is  effec- 
tive for  a  future  offense? 

Mr.  Knapp.     Yes,  sir;  we  assume  that  it  is. 

Mr.  Mann.     I  say  assume  under  the  present  law 

Mr.  Knapp.     I  do  not  doubt  it. 
■  Mr.  Mann.     What  has  been  the  fact  where  you  have  made  an 
order  of  that  kind;  what  has  the  railroad  company  actually  done? 

Mr,  Knapp.  Well,  I  say,  in  all  such  cases,  we  have  included  in 
the  report  of  the  case  a  recommendation;  that  is,  unless  we  have 
found  for  the  carrier,  as  often  happens;  that  is,  not  sustained  the 
complaint.  And  in  every  case  the  carriers  have  either  adopted  the 
recommendation  and  changed  their  tariff  accordingly  or  they  have 
done  nothing. 

Mv.  Mann.  You  mean  they  have  failed  to  carry  out  your  or- 
der and  to  cease  and  desist? 

Mr.  Knapp.     Yes,  sir. 

Mr.  Mann.  You  have  power  to  file  a  proceeding  in  court  to 
compel  them  to  obey  that  order? 

Mr.  Knapp.     Yes,  sir. 

Mr.  Mann.     Have  you  done  that? 

Mr.  Knapp.     Yes,  sir;  we  have  several  cases  in  court  now. 


53 

Mr.  Mann.  Some  of  those  cases  have  gone  into  court  and  are 
now  pending;  have  any  of  them  been  disposed  of? 

Mr.  Knapp.     No  case,  I  think,  has  been  decided. 

Mr.  Mann.  What  I  wanted  to  get  at  is  whether,  in  fact,  the 
railroad  companies  have  adopted  this  policy,  which  of  course  they 
could  do;  if,  for  instance  you  decide  that  the  rate  of  one  dollar  is 
unreasonable,  and  you  order  them  to  cease  and  desist  from  charging 
a  dollar  in  the  future,  I  want  to  know  whether  they  thereupon  obey 
that  order  and  the  next  day  make  a  rate  of  99t}  cents. 

Mr.  Knapp.  No,  Mr.  Mann;  no  railroad  would  be  as  stupid 
as  that. 

Mr.  Mann.     You  said  they  could 

Mr.  Knapp.     Yes,  sir;  they  could  do  that. 

Mr.  Mann.     I  want  to  know  whether  they  do. 

Mr.  Knapp.     No,  sir;  let  me  explain  to  you  why.    . 

Mr.  Mann.  That  is  a  very  practical  matter,  and  one  of  con- 
siderable interest. 

THE  COMMISSION  CANNOT  ENFORCE  THE  ORDER  IT  MAKES. 

Mr.  Knapp.  Surely  a  very  practical  matter.  Now,  of  course, 
the  Commission  can  not  enforce  its  own  order.  We  have  been 
talking  about  the  order  that  the  Commission  can  make.  The  effect 
of  that  order  when  it  is  made,  how  it  shall  be  enforced,  is  another 
question,  but  under  the  existing  law,  as  you  doubtless  understand, 
the  carrier  is  under  no  legal  compulsion  to  take  any  action  when 
the  order  of  the  Commission  passes  against  it.  It  can  wait,  and 
does  wait,  until  in  accordance  with  the  proceedings  or  procedure 
under  certain  laws,  a  bill  is  filed  in  the  circuit  court  to  enforce  the 
order. 

Take  a  concrete  case.  Suppose  that  a  board  of  trade  repre- 
senting a  community  complains  of  a  rate,  which  is  |1,  and  the  com- 
plaint is  served  upon  the  carrier,  and  the  complaint  is  heard.  The 
Commission  reaches  the  conclusion  that  a  dollar  rate  is  unreason- 
ably high,  and  thereby  violates  the  first  section  of  the  law,  which 
requires  that  rates  shall  be  just  and  reasonable.  It  therefore  makes 
an  order  that  the  carrier  shall  cease  and  desist  from  charging  a 
dollar.  That  is  all  the  prder  to  make.  Now,  of  course,  if  the  car- 
rier is  disposed  to  make  some  concession  or  to  adopt  the  recom- 
mendation which  the  Commission  may  have  made  in  its  report  it 
doe§  that.  If  it  is  disposed  to  adhere  to  its  position  and  defend 
this  rate,  of  course  it  does  nothing.  And  the  reason  why  the  car- 
rier will  not  make  a  nominal  change  in  the  rate  in  order  to  techni- 
cally comply  with  the  order  of  the  Commission  is  simply  this:  The 
carrier  will  wait  until  the  bill  is  filed  to  enforce  the  order,  which 
is  simply  an  order  to  cease  and  desist,  and  the  carrier  will  then  try 
the  case  out  in  the  Circuit  Court,  and  then  it  may  appeal  to  the 
Circuit  Court  of  Appeals,  and  then  to  the  Supreme  Court  of  the 
United  States. 

And  if  finally  the  court  of  last  resort  sustains  the  decision  of 
the  Commission,  which  was  simply  to  cease  and  desist  from  charg- 
ing a  dollar,  then  the  carrier  can  reduce  its  rate  to  99^  cents,  and 


54 

thereby  comply  not  only  with  the  order  of  the  Commission  but  with 
the  order  of  the  Supreme  Court  of  the  United  States  as  well. 

Mr.  Mann.  That  is  what  the  law  permits  them  to  do.  But 
what,  as  a  mater  of  fact,  have  they  done? 

Mr.  Knapp.  They  have  either  done  nothing,  and  awaited  the 
suit 

Mr.  Mann.    Have  you  had  suits  of  that  sort  commenced? 

SUITS  TO  ENFORCE  ORDERS  OF  THE  COMMISSION  THROUGH 
THE  COURTS  HAVE  BEEN  PENDING  OVER  FIVE  YEARS. 

Mr.  Knapp.  I  think  in  every  case,  after  a  reasonable  delay,  a 
suit  has  been  brought,  and  those  suits  are  now  pending. 

Mr.  Mann.     Have  any  of  those  suits  been  disposed  of? 

Mr.  Knapp.  I  am  quite  confident  that  no  suit  has  been  de- 
cided.    There  are  a  number  pending. 

Mr.  Clements.     None  by  the  Supreme  Court. 

Mr.  Coombs.     By  the  Circuit  Court  of  Appeals? 

Mr.  Knapp.  They  have  been  pushed.  I  am  speaking  now,  as 
Mr.  Clements  suggests,  of  the  cases  in  the  Supreme  Court.  None 
have  been  decided  by  the  Supreme  Court.    . 

Mr.  Mann.  Has  any  case  been  disposed  of  by  the  court  of 
last  resort? 

Mr.  Knapp.  There  has  been  no  case  which  was  commenced 
since  the  Supreme  Court  decided  that  we  could  only  order  the  car- 
rier to  cease  and  desist,  which  has  been  disposed  of  by  the  Supreme 
Court. 

Mr.  Mann.  It  may  not  have  been  appealed  to  the  Supreme 
Court.     Has  any  final  order  been  passed 

Mr.  Knapp.     Yes,  sir;  and  sustained  by  the  Circuit  Court  of 

And  not  appealed  to  the  Supreme  Court  of  the 

No,  sir;  in  no  case  has  the  litigation  been  entirely 

How  long  ago  was  that  decision  rendered? 
In  1897. 
How  many  cases  have  you  now  pending? 
I  do  not  know  quite  the  number. 
Do  you  report  all  the  cases  in  your  last  report? 
There  are  only  about  two  dozen  there. 
Mr.  Knapp.     Yes,  sir. 

Mr.  Mann.    In  the  last  annual  report,  just  issued? 
Mr.  Knapp.    I  suppose  there  are  six  or  eight  pending. 
Mr.  Mann.    Are  all  those  cases  pending  in  which  you  have  had 
occasion  to  find  that  the  rate  was  unreasonable  and  to  order  a  rail- 
road company  to  cease  and  desist  from  charging  it  in  the  future? 

Mr.  Knapp.  With  this  difference — that  there  would  sometimes 
be  a  group  of  cases,  or  a  number  involving  the  same  question,  and 
then,  of  course,  to  save  expense,  only  one  suit  would  be  brought  and 
the  other  matters  would  stand  in  abeyance  awaiting  the  decision 
of  the  question  which  controlled  them  all. 


Appeals 

Mr. 

Mann. 

United  1 

States? 

Mr. 

Knapp 

finished. 

Mr. 

Mann. 

Mr. 

Knapp 

Mr. 

Mann. 

Mr. 

Knapp 

Mr. 

Mann. 

55 

Mr.  Mann.  It  is  impossible  to  tell,  then,  what  the  operation 
of  the  law  would  be  if  the  Huprerae  Court  passed  upon  these  ques- 
tions— this  question  which  you  decided  and  ordered  the  railroad 
compan}'  to  obey,  your  order  to  cease  and  desist? 

Mr.  Knapp.  Of  course  it  is  impossible  to  tell  what  the  railroad 
company  will  do. 

Mr.  Mann.  You  have  no  practical  experience  in  reference  to  it 
at  all;  that  matter  has  not  been  tried  yet? 

Mr.  Knapp.  No,  sir.  Of  course,  as  to  a  railroad  company 
which  the  Commission  has  ordered  to  cease  and  desist  from  chars;- 
ing  a  particular  rate,  when  that  order  has  been  sustained  by  all  the 
courts,  including  the  Supreme  Court,  we  do  not  know  what  the 
carrier  would  do.  I  am  only  suggesting  to  you  that  the  carrier  can 
make  a  nominal  change  which  will  effect  legal  compliance  with 
both  the  order  of  the  Commission  and  the  decree  of  the  court. 

Mr,  Mann.  And  it  has  been  over  five  years  since  that  opinjon 
was  given  b}'  the  Supreme  Court,  and  yet  no  case  has  reached  the 
point  yet  where  you  get  any  practical  experience  out  of  it? 

Mr.  Knapp.    That  is  substantially  true. 

ORDERS  OF  NO  EFFECT  UNTIL  ENFORCED  BY  COURT  OF  LAST 

RESORT. 

Mr.  Richardson.  I  hope  you  will  excuse  me,  Judge  Knapp;  I 
am  very  much  interested  about  these  facts,  and  the  matter  of  tlie 
enlargement  of  the  powers  of  the  Commission.  I  hope  that  it  will 
not  put  you  out  to  ask  you  to  give  me  certain  information,  as  I  was 
not  here  when  you  began  your  remarks  to-day.  As  I  understand 
from  you,  when  the  Commission,  for  instance,  ascertain  that  the 
railroad  is  charging  a  dollar  for  certain  things,  and  that  that  is  too 
much,  the  Commission  say  that  is  too  much,  and  say,  for  instance, 
50  cents  would  be  right — giving  that  as  an  illustration — that  is  not 
permanent,  that  order,  but  suppose  it  is  taken  to  the  Circuit  Court, 
as  you  suggest  it  will  be  or  can  be;  it  can  be  taken  to  the  Circuit 
Court.  Now,  the  Circuit  Court  passes  upon  the  order  of  the  Com- 
mission as  made,  and  sustains  the  Commission;  then  an  appeal  is 
taken  to  the  final  court,  the  United  States  Supreme  Court,  and  that 
court  holds  "that  the  order  of  the  Interstate  Commerce  Commission 
is  not  right  and  proper,  and  cancels  it  and  sets  it  aside;  has  the  rail- 
road, from  the  time  you  made  that  order,  been  complying  with  it  or 
not,  and  charging  only  50  cents? 

Mr.  Knapp.    Not  at  all. 

Mr.  Richardson.    Then  what  charge  is  it  making? 

Mr.  Knapp.    The  charge  originally  complained  of. 

Mr.  Richardson.     The  original  one? 

Mr.  Knapp.     Yes,  sir. 

Mr.  Richardson.  Then  your  order  has  no  effect  upon  the  situ- 
ation so  far  as  decreasing  the  charge  is  concerned? 

Mr.  Knapp.  No,  sir;  our  order  has  no  effect  until  it  is  enforced 
by  court,  and  of  course  it  is  not  enforced  by  a  court  until  the  court 
of  last  resort  has  decided  the  question. 


56 

Mr.  KicHARDSON.  That,  as  I  understand,  is  not  the  provision 
contained  in  the  Corliss  bill  at  all. 

Mr.  Knapp.    The  Corliss  bill  proposes  to  make 

Mr.  Richardson.    To  make  it  arbitrary,  and  enforce  it  at  once? 

Mr.  Knapp.    To  a  certain  extent. 

Mr.  Corliss.  If  I  understand  you,  you  state  that  if  the  rate  was 
a  dollar  and  you  should  hold  that  that  was  an  excessive  rate,  and 
you  had  recommended  80  cents,  the  Supreme  Court  has  held  that 
you  could  not  enforce  an  80-cent  rate,  nor  would  the  court  uphold 
that  order  and  enforce  an  80-ceut  rate. 

Mr,  Knapp.    That  is  right. 

Mr.  Corliss.  So  that  really,  when  these  cases  which  are  now 
pending  reach  the  Supreme  Court  of  the  United  States,  all  that  the 
court  will  decide,  if  they  follow  their  prior  decisions,  is  whether  or 
not  they  should  cease  and  desist  from  charging  a  dollar? 

Mr.  Knapp.    That  is  all. 

FINAL  ENFORCEMENT  OF  ORDER  BY  COURT  OF  LAST  RESORT 
AFFORDS  NO  ADEQUATE  REMEDY. 

Mr  Corliss.  And  that  a  compliance  with  the  decisions  to  the 
extent  of  5  cents  would  be  a  satisfaction  of  that  entire  judgment, 
and  you  would  have  to  start  over  again, 

Mr,  Knapp.  You  have  simply  got  a  final  decree  that  the  rate 
originally  complained  of  was  too  high. 

Mr,  Corliss.    And  they  could  start  again  at  99  cents. 

Mr.  Knapp.  You  have  got  no  lower  rate  fixed.  You  have  no 
actual  relief  to  anybody.    That  must  be  so. 

Mr.  Mann.  They  have  the  power  to  decide  that  a  rate  is  un- 
reasonable.   That  is  all  they  can  hold,  as  a  matter  of  law? 

Mr.  Knapp.     Under  the  present  statue. 

Mr,  Mann.  They  can  argue  all  they  please  as  to  what  is  a  reas- 
onable rate,  and  then  it  is  in  the  discretion  of  the  railroad  company 
to  accept  the  statement  of  the  Court  as  to  what  is  considered 
to  be  a  reasonable  rate  or  not,  just  as  they  please,  or  at  least  you 
have  not  tried  that  to  see  whether  it  is  or  not? 

Mr.  Knapp.  There  has  not  been  time  to  get  a  case  through  the 
Supreme  Court.  / 

SUPREME  COURT  HAS  NO   POWER  TO  FIX  A  RATE  FOR  THE 

FUTURE. 

Mr.  Mann,  You  have  not  any  decision  on  that.  All  you  could 
do  was  to  say  that  the  dollar  charge  was  too  much,  but  the  Supreme 
Court  could  say  what  a  reasonable  charge  was. 

Mr.  Knapp.    No,  sir;  they  can  not  do  it. 

Mr.  Mann.  They  can  say  what  a  reasonable  rate  is,  but  they 
can  not  issue  an  order  fixing  what  it  shall  be. 

Mr,  Knapp,    Who  can  say  it? 

Mr.  Mann.    The  Supreme  Court  of  the  United  States. 

Mr.  Knapp.    No,  sir. 

Mr.  Mann.    Oh,  yes,  thev  can.    It  may  become  very  necessary 


57 

in  arguing  a  particular  case.     But  they  can  not  fix  it  as  a  future 
rate. 

•   Mr.  Knapp.    They  can  only  say  to  the  extent  of  deciding  that 
the  rate  has  been  or  is  unreasonable. 

Now,  gentlemen,  that  is  the  whole  question;  that  is,  that  is  the 
vital  question,  the  important  question. 

Mr.  Adamson.  There  would  still  be  a  good  deal  of  circumlocu- 
tions ry  legislation  even  after  you  got  the  Corliss  bill? 

Mr.  KxAPP.    Well 

Mr.  Adamson.  If  the  Supreme  Court  decides  that  the  rate  you 
fix,  even  under  the  Corliss  bill,  is  too  high,  you  can  fix  another  rate, 
but  they  can  still  make  that ,  can  they  not? 

Mr.  Knapp.  No,  sir.  The  Corliss  bill  provides  that  when  the 
Commission  has  heard  a  case  in  the  way  I  have  described 

Mr.  Adamson.     Yes,  sir. 

Mr.  Knapp  (continuing).  It  may  not  only  condemn  a  rate  com- 
plained of,  but  may  prescribe  the  rate  to  be  substituted  in  its  place 
in  the  future. 

Mr.  Adamson.  That  goes  to  the  courts,  and  that  case  is  car- 
ried through,  and  they  decide  that  it  is  too  high,  and  then  the  Cor- 
liss bill  says  that  you  may  sit  down  and  make  another  rate,  and 
they  can  say  that  that  is  too  high 

Mr.  Knapp.    Yes,  sir;  of  course. 

Mr.  Adamson.  Whv  don't  vou  fix  legislation  so  that  it  has  an 
end  somewhere?  It  looks  like  human  sagacity  ought  to  be  abl^  to 
fix  it  so  as  to  end  this  matter  somewhere. 

NOT  ADVOCATING   EXTREME   OR   RADICAL   MEASURES. 

Mr.  Knapp.  I  undertook  to  say  in  the  beginning  that  I  am  not 
in  favor  of  extreme  or  radical  changes  in  this  law. 

Mr.  Adamson.  You  would  like  the  present  generation  to  get 
some  benefit  out  of  this,  would  you  not? 

Mr.  Knapp.  I  think  the  development  of  our  laws  on  this  sub- 
ject should  be  by  evolution,  and  not  by  revolution.  And  I  am  not 
here  to  advocate — because  no  pending  measure  proposes  it — any 
arbitrary  or  final  power  on  the  part  of  the  Commission. 

The  question  is  right  here,  in  very  narrow  compass,  and  very 
easily  stated.  When  you  have  the  complaint  and  the  parties  all 
before  you  and  the  question  examined  with  all  the  light  thrown 
upon  it'  that  can  come  from  the  testimony  of  witnesses  and  the  ar- 
gument of  counsel,  what  order  shall  the  Commission  have  authority 
to  make  in  such  a  case?  That  is  all  the  question  there  is.  That  is 
the  real  question  here. 

Mr.  Richardson.  Right  there,  do  you  not  think  that  as  a  mere 
matter  of  common  sense  and  conservatism,  from  the  bench  or  from 
any  commission  that  has  such  authority  as  that,  if  the  Supreme 
Court  had  held  that  a  dollar  charge  was  not  reasonable,  or  any  au- 
thority was  given  to  you  to  take  advantage  of  the  Corliss  bill  and 
fix  another  charge  without  any  further  evidence,  that  you  would 
fix  it,  in  view  of  the  decision  of  the  Supreme  Court,  and  use  con- 
servatism and  good  judgment  in  trying  to  strike  a  middle  ground? 


58 

Mr.  Knapp.  I  can  not  imagine  a  commission  that  would  not  do 
that. 

Mr.  Mann.  You  can  imagine  a  railroad  company  that  would, 
but  not  a  commission? 

]Mr.  Richardson.    That  is  another  question  entirely. 

Mr.  Adamson.  You  say  five  years  have  passed,  and  you  have 
not  got  the  first  case  determined  yet.  If  you  decided  a  case  under 
the  Corliss  act,  and  the  railroads  spent  five  years  in  going  around 
through  the  courts,  and  then  it  comes  back  and  you  take  another 
hearing,  and  on  your  own  suggestion,  or  on  the  suggestion  of  the 
Court's  talk,  you  make  another  rate — you  may  hear  evidence  or  not, 
or  you  may  fix  the  new  rate  on  the  record,  and  then  the  railroad 
enters  another  rate,  and  then  the  Court  says  that  you  have  not  got 
it  quite  low  enough  yet,  and  it  is  not  at  all  certain  that  the  Supreme 
Court  will  ever  decide  to  let  a  rate  stand;  there  is  a  generation 
gone 

Mr.  Knapp.  And  in  such  a  case  the  recommendation  of  the 
Commission  has  been  heralded  to  the  country  as  ''the  inordinate 
demand  of  the  Interstate  Commerce  Commission." 

POWER  TO  FIX  A  RATE  FOR  THE  FUTURE  RESIDES  IN  CON- 
GRESS AND  CAN  BE  DELEGATED  ONLY  TO  A 
COMMISSION. 

,  Mr.  Mann.  Mr.  Adamson  is  pointing  at  the  question,  as  I  un- 
derstand it,  as  to  whether  the  court,  the  Supreme  Court  of  the 
United  States,  which  refused  your  decision  upon  all  the  evidence 
you  had  before  it,  shall  have  the  power  to  say  what  is  a  reasonable 
rate. 

Mr.  Knapp.  Do  not  let  us  have  any  confusion  on  that.  No  court 
can  fix  a  rate  for  the  future.  If  authority  is  given  to  determine  in 
such  a  case  as  I  have  described,  what  rate  shall  be  substituted  for 
the  one  under  consideration,  that  authority  can  be  given  only  to  a 
commission,  or  exercised  directly  by  Congress  itself.  It  can  not  be 
given  to  a  court. 

Mr.  Stewart.  Right  there,  railroad  corporations  want  to 
avoid  litigation? 

Mr.  Knapp.     Assuredly  they  do. 

Mr.  Stewart.  In  case  the  Supreme  Court  should  decide  that 
the  Commission  was  right,  and  they  should  fix  a  reasonable  rate  for 
the  future,  do  you  not  think  that  the  corporation  in  order  to  avoid 
litigation  would  acquiesce,  if  it  were  a  reasonable  rate? 

^Ir.  Knapp.     Certainly. 

Mr.  Stewart.  To  avoid  the  litigation  Mr.  Adamson  speaks  of 
— further  litigation? 


'f^'- 


THE  VERY  LIMITED  AUTHORITY  OF  THE  COMMISSION  AND 

ITS  INEFFECTIVENESS. 

Mr.  Knapp.  When  you  bear  in  mind  the  very  limited  authority 
the  Commission  now  has.  which  is  simply  to  say,  ''This  thing  is 
wrong,"  and  bear  in  mind  that  the  order  of  the  Commission  say- 


Mr. 

Knapp. 

Mr. 

Coombs 

Mr. 

Knapp. 

Mr. 

Mann. 

Mr. 

Knapp. 

sonable 

or  not. 

Mr. 

INIann. 

59 

ing  it  is  wrong  is  not  obligatory  upon  anybody,  that  before  it  can 
be  enforced  there  must  be  a  suit  in  the  courts  for  that  purpose, 
wliich  must  be  carried  through  to  the  court  of  last  resort;  wlien  you 
talce  all  that  into  account.  I  think  it  is  to  the  credit  of  the  railways 
of  the  country  as  a  whole  that  so  many  of  the  recommendations  of 
the  Commission  have  been  adopted. 

Mr.  Mann.  You  say  that  no  court  can  decide  what  is  a  reason- 
able rate? 

For  the  future. 
It  can  not  establish  a  rate? 
Can  not  establish  a  rate. 
That  may  be  true  that  it  can  not  establish  a  rate. 
A  court  can  decide  whether  a  rate  has  been  rea- 

The  Court  cau  decide  whether  a  man  has  offered 
a  reasonable  rate  under  the  common  law,  always  could;  that  is  a 
future  rate. 

Mr.  Knapp.  Yes,  sir;  but  it  applies  only  to  the  time  when  the 
tender  was  made,  and  to  the  particular  traffic  to  which  the  tender 
relates. 

Mr.  Coombs.  Does  the  Supreme  Court  pass  upon  questions  of 
fact  in  its  appeals? 

Mr.  Knapp.     Oh,  no;  no,  sir. 

Mr.  Coombs.     Does  the  Circuit  Court  of  x\ppeals? 

Mr.  Knapp.  I  understand,  of  course,  the  Circuit  Court  will 
pass  upon  the  facts. 

Mr.  Coombs.     Upon  your  appeal,  what  do  you  appeal  upon? 

DETERMINATION  OF  RATE  FOR  FUTURE  APPLICATION  CAN- 
NOT BE  MADE  A  JUDICIAL  QUESTION. 

Mr.  Knapp.  Let  us  try  to  avoid  confusion  at  that  point.  Bear 
it  in  mind,  gentlemen,  that  while  the  determination  whether  a  given 
rate  is — that  it  has  been — reasonable  or  not,  is  a  judicial  question, 
the  determination  of  the  rate  to  be  substituted  in  the  future  is  not 
a  judicial  question,  can  not  be  made  a  judicial  question,  and  that 
authority,  if  exercised  at  all  under  the  circumstances,  must  be  ex- 
ercised either  by  the  legislative  body  itself  or  by  an  administrative 
tribunal  to  which  some  portion  of  the  legislative  power  is  delegated. 
Now,  that  beipg  so,  of  course  you  must  bear  in  mind  that  it  is  in- 
correct and  misleading  to  speak  of  an  appeal  from  the  order  of  the 
Commission.  The  Commission  is  not  a  court,  and  in  a  constitu- 
tional sense  the  carrier  has  not  had  its  day  in  court  when  the  Com- 
mission has  decided  its  case.  The  carrier  gets  its  day  in  court  un- 
der the  present  law  when  the  suit  is  brought  to  enforce  the  order, 

Mr.  Adamson.  Your  idea  is  not  to  ask  for  a  greater  number  of 
powers,  but  for  more  power  as  to  the  few  things  that  you  do  try  to 
do;  that  while  you  do  not  seek  to  go  further  and  fix  a  rate,- or  decide 
how  low  a  rate  ought  to  be,  you  want  the  power,  when  yon  say  a 
rate  is  too  high,  to  put  that  opinion  in  force  and  stop  the  railroad 
charging  that  rate? 

Mr.  Knapp.  This  bill  proposes  that  the  Commission  shall  not 
only  have  authority  to  say  that  the  rate  complained  of  is  wrong. 


60 

bnt  to  determine  the  extent  to  which  it  is  wrong,  and  prescribe  the 
rate  to  be  put  in  its  place  and  observed  in  the  future. 

Mr.  Adamsox.  I  talked  to  jou  a  while  ago  about  the  wheel 
going  around  so  often.  Had  we  not  better  improve  that  bill,  or 
amend  it,  so  as  to  say  that  after  that  thing  has  been  back  to  you 
a  certain  number  of  times  it  shall  stop,  except  under  such  condi- 
tions as  extraordinary  montions  made  in  court,  showing  that  extra- 
ordinary conditions  exist,  beyond  the  power  of  a  party  to  control, 
or  something  of  that  sort,  and  so  put  an  end  to  the  matter  some- 
where? 

Mr.  KxAPP.  With  reference  to  that,  as  I  said,  when  you  have 
determined  the  question  as  to  the  authority  of  the  Commission, 
what  kind  of  an  order  to  make,  then  the  next  question  comes,  what 
effect  ^hall  be  given  to  that  order;  how  shall  compliance  with  it 
be  secured;  how  shall  a  review  of  it  by  the  courts  be  permitted? 

STATEMENT  OF  HON.  MARTIN  A.  KNAPP,  CHAIRMAN  OF  THE 
INTERSTATE  COMMERCE  COMMISSION— Continued. 

Friday,  April  25,  1902. 

Mr.  KxAPP,  Mr.  Chairman  and  gentlemen:  you  have  honored 
me  with  such  respectful  attention  during  the  making  of  my  quite 
protracted  statement  that  the  best  acknowledgment  I  can  make  is 
to  bring  my  remarks  to  a  close  at  the  earliest  possible  moment, 

I  have  endeavored  to  point  out  that  the  first  question  on  this 
branch  of  the  case  is  as  to  what  orders  the  Commission  shall  have 
authority  to  make;  and  I  do  not  know  that  I  care  to  add  anything 
to  what  I  have  already  said  upon  that  subject.  You  understand 
the  present  situation.  You  are  aware  that  after  the  fullest  investi- 
gation, upon  complaint,  notice,  and  due  hearing,  the  only  order 
which  the  Commission  now  has  authority  to  make  is,  if  the  facts 
so  warrant,  for  the  carrier  to  cease  and  desist  from  charging  the 
particular  rate,  or  maintaining  the  particular  rate  relation,  which 
is  complained  of.  The  question  is  whether  in  those  cases,  and  un- 
der tbose  circumstances,  and  subject  to  the  conditions  proposed,  the 
Commission  shall  have  authority  not  only  to  say  that  the  rate  or 
rate  relation  complained  of  is  unlawful,  but  also  authority  to  pre- 
scribe in  the  first  instance  a  rate  or  rate  relation  which  shall  be 
substituted  in  place  of  the  one  complained  of.     That  is  the  question. 

COMPREHENSIVENESS    OF    ORDER    OF    THE    COMMISSION 
UNDER  PROPOSED  AMENDMENT. 

The  Chairman.  Now.  Judge,  if  this  will  not  interrupt  you,  I 
wish  you  would  state  how  comprehensive  that  order  should  be. 
looking  to  the  entire  rate  charges  of  a  system  of  roads;  whether  it 
should  be  so  comprehensive  as  to  cover  an  entire  schedule  of  rates. 
as  one  act,  or  whether  it  should  be  limited  to  the  particular  rate 
that  was  complained  of.  I  ask  that  question  for  this  reason:  that 
I  am  satisfied  that  there  are  parties  who  would,  perhaps,  be  con- 
tented to  have,  we  will  say,  to  illustrate,  a  single  rate  regulated  by 
a  commission  when  they  would  not  be  willing  that  at  one  time  and 
in  one  order  there  should  be  an  entire  rearrangement  of  the  rates 


61 

of  tTieir  whole  system  of  roads.  If  you  would  give  your  views  as 
to  that  matter,  whether  the  power  ought  to  be  limited,  and  if  so, 
how  it  would  be  limited,  I  think  the  Committee  would  be  glad. 

Mr.  Knapp.  If  I  correctly  understand  the  present  law»  as  it 
would  be  modified  by  the  provisions  of  the  Corliss  bill  in  the  par- 
ticular respect  now  mentioned,  I  must  say  that  it  is  conceivable  it 
would  be  within  the  terms  of  the  law  that  the  entire  schedule  of  a 
given  carrier,  or  system  of  carriers,  might  be  made  the  subject  of 
complaint  and  adjudication,  I  think  I  perceive  the  objection  which 
is  suggested  by  your  remarks. 

Mr.  Mann.  If  that  were  the  case,  would  it  not  be  necessary 
that  the  Court,  in  passing  upon  it.  should  have  the  authority  to  say 
that  the  order  should  remain  in  force  as  to  one  part  of  it  if  the 
Court  should  find  as  to  a  particular  commodity,  for  instance,  the 
order  made  a  rate  unreasonably  low?  Under  this  provision  the 
Court  can  either  order  the  order  of  the  Commission  to  remain  in 
force  or  not,  and  if  it  found  that  the  rate  on  a  particular  com- 
modity would  be  too  low,  what  would  be  the  effect  of  that? 

Mr.  Knapp.  May  I  defer  taking  up  that  question  until  I  take 
up  that  particular  part  of  the  subject?  I  am  endeavoring  to  confine 
this  now  to  what  order  the  Commission  shall  have  power  to  make. 
The  effect  of  that  order,  how  it  is  to  be  enforced,  how  it  is  to  be 
reviewed,  is  another  part  of  the  question. 

Mr.  Mann.     Very  well. 

Mr.  Knapp.  Now,  Mr.  Chairman,  the  best  answer  which  I  can 
make  to  the  suggesstion  presented  by  you  is  this:  In  the  first  place, 
it  has  never  yet  happened,  in  the  experience  of  the  Commission,  that 
complaint  has  been  made  of  an  entire  system  of  rates,  or  any  car- 
rier, or  system  of  carriers,  except  where  the  element  of  discrimina- 
tion was  involved,  and  then  the  complaint  was  not  that  the  rates 
were  excessive,  but  that  they  were  unfairly  adjusted  as  between 
two  different  localities.  I  do  not  recall  an  instance,  and  I  am  very 
certain  not  one  has  ever  occurred,  in  which  anything  like  the  com- 
prehensive system  of  rates  has  been  challenged  on  the  sole  ground 
that  it  gave  the  carrier  an  undue  revenue,  and  imposed  upon  the 
public  an  undue  burden.     -And  T  think  that  will  always  be  the  case. 

ORDER  OF  COMMISSION  MUST  BE  RESTRICTED  TO  THE  FACTS 
PROVEN  IN  THE  INVESTIGATION. 

My  further  answer  is  this:  Under  any  pending  proposal  the 
Commission  would  have  no  authority  to  make  any  kind  of  an  order 
except  one  which  was  justified  by  the  facts  proven  in  the  investiga- 
tion, and  as  a  matter  of  practice  and  justice,  if  a  complaining  lo- 
cality should  be  able  to  establish,  the  burden  of  proof  being  laid 
upon  it,  that  the  whole  range  of  a  given  railway's  charges  were  ex- 
cessive, and  secured  to  that  carrier  a  greater  revenue  than  it  was 
entitled  to  and  imposed  upon  the  public  a  burden  which  it  ought 
not  to  bear,  if  that  was  proved  and  established  to  the  satisfaction 
of  fair-minded  and  impartial  men,  I  do  not  see  how  we  are  to  resist 
the  conclusion  that  an  appropriate  order  ought  to  be  made,  that 
is  in  such  a  case.     So  that  when  you  take  into  account  that  there  is 


62 

to  be  DO  arbitrary  authority,  no  ex-parte  decree,  but  only  such  a 
determination  as  a  judicial  tribunal  might  reach  if  it  had  jurisdic- 
tion upon  the  precise  facts,  I  do  not  know  why  the  authority  should 
not  go  to  that  extent.     I  add  to  that 

The  Chairman.  Would  you  object  to  giving  your  views  upon 
the  practicability  of  the  procedure;  for  instance,  suppose  that  a 
complaint  originates  in  New  York,  w'here  the  entire  system  termi- 
nates, and  where  the  complainants  might  be  interested  in  a  rate  on 
some  one  of  the  subsidiary  lines,  branch  lines,  in  a  very  remote 
region.  What  would  be  the  practicability  of  entering  in  on  the 
part  of  the  Commission  to  the  necessary  proofs,  to  go,  over  all  of 
the  rates  from,  say,  the  adjacent  stations  that  might  be  on  that 
road,  and  then  the  practicability  of  a  review  of  all  of  that  by  a  court 
within  the  limited  time  of  two  years,  treating  it  simply  as  a  prac- 
tical matter,  you  striving  for  the  information  that  would  be  neces- 
sary to  enable  you  to  make  your  order,  and  the  Court  then,  in  mak- 
ing that  investigation  which  would  enable  it  to  determine  whether 
that  order  was  a  just  one,  and  involving  the  entirety  of  one  of  these 
great  systems,  terminating,  we  will  say,  at  a  seaboard  point? 

Mr.  KNAPr.  There  is  no  impracticability  in  theory.  The  prac- 
tical difficulty  would  be,  and  it  is  almost  insuperable,  I  think,  for 
any  complaining  shipper  or  locality  to  make  proof  that  would 
justify  the  Commission  in  interfering  with  the  general  range  of 
rates  of  one  road,  or  a  system  of  roads,  if  the  element  of  discrimina- 
tion between  localities  was  not  involved. 

One  thing  and  another,  Mr.  Chairman,  has  led  me  to  give  some 
consideration  to  that  question,  and  I  have  endeavored  to  inform 
myself  by  reading  with  care  the  decisions  of  the  Supreme  Court 
and  other  courts  in  cases  which  have  some  relation  to  that  question. 
The  observations  of  Mr.  Justice  Brewer  in  the  recent  case  of  the 
Kansas  City  stock  yards  indicate  to  my  mind  that  no  tribunal  would 
be  warranted  in  reducing  the  general  range  of  rates,  thereby  reduc- 
ing in  a  substantial  degree  the  entire  revenues  of  the  railroad  or 
system,  without  the  clearest  and  most  cogent  proof  that  that  ear- 
ner was  exacting  an  undue  tribute  from  the  public. 

THE  MANY  AND  DIVERSE  ELEMENTS  OF  COST  TO  BE 

CONSIDERED. 

Such  consideration  as  I  have  given  to  that  question  leads  me  to 
believe,  Mr.  Chairman,  that  it  would  be  extremely  difficult,  prac- 
tically impossible  at  the  present  time,  to  prove  such  a  case  as  your 
observation  suggests.  I  doubt  very  much  whether  it  can  be  done. 
kSpeaking  for  myself,  I  am  inclined  to  say  this:  That  you  can  not 
materially  reduce  the  entire  revenues  of  a  railroad  s^'stem  until  you 
have  some  definite  basis  upon  which  to  proceed;  and  one  of  the  dif- 
ficulties which  must  lie  at  the  foundation  of  any  such  inquiry  is,  on 
what  jH'incipal  sum  is  this  carrier  entitled  to  make  dividends,  and 
then  the  question  comes,  W^hat  dividends  is  it  entitled  to  make? 
Now,  when  30U  consider  the  way  in  which  our  railway  systems  have 
actually  been  developed,  how  they  have  been  built  and  rebuilt,  and 
are  never  finished,  the  question  of  determining  with  any  reasonable 


63 

certainty  what  aggregate  snm  has  been  expended  on  this  property 
which  onght  to  get  a  return,  if  the  business  warrants,  you  have 
a  very  difficult  question  to  solve — one  which  commissions  and 
courts,  I  think,  will  approach  with  a  full  sense  of  its  difficulty  and 
of  their  responsibility. 

The  Chairman.  I  realize  in  part  the  difficulty,  and  the  infinite 
number  of  factors  that  enter  into  the  matter  as  elements  of  cost  of 
construction,  and  conditions  of  operation,  and  that  was  why  I 
wanted  to  know,  in  your  judgment,  in  case  a  question  of  that  kind 
«hould  be  presented  to  you,  if  it  is  presented  to  you  in  the  nature  of  ' 
a  complaint  and  if  the  issue  is  joined  by  the  answer  of  the  company, 
then  it  must  be  investigated. 

Mr.  Knapp.    Quite  true. 

The  Chairman.  And  what  the  nature  of  the  proof  would  be  I 
do  not  know.  Of  course  I  do  not  know  what  the  character  would 
be,  what  the  elements  that  would  enter  into  the  cost  would  be;  all 
of  that  would  depend,  I  suppose,  a  good  deal  upon  the  genius  of  the 
complainant;  and  therefore  I  wanted  to  get  your  opinion,  in  a  case 
of  that  kind,  if  it  was  practicable  for  the  Commission  to  hear,  and 
then  determine,  and  then  make  such  report  and  take  such  atcion 
that  the  court  that  would  have  to  review  it  could  have  sufficient 
time;  if  it  was  not  practically  impossible  to  make  an  inquiry  of  this 
nature  within  a  period  of  two  years,  where  the  case  was  vigorously 
prosecuted  and  resisted. 

Mr.  Knapp.  You  mean,  I  suppose,  if  the  Board  of  Trade  of 
Chicago,  representing  the  commercial  interests  of  that  city,  should 
complain  of  all  the  rates  on  all  the  lines  leading  out  into  the  terri- 
tory which  gets  its  supplies  from  Chicago,  whether  it  would  be  prac- 
ticable for  such  a  case  to  be  investigated? 

The  Chairman.  That  case  might  be  an  illustration,  but  I  had 
in  my  mind  some  competent  complainant  complaining  of  the  New 
York  Central  system  at  the  New  York  terminus;  somebody  in  New 
Y^ork  making  that  complaint  on  the  charges  of  the  entire  system. 

JURISDICTION   OF    COMMISSTON    NOT   TO    BE   ENLARGED   BY 

ANY  PENDING  BILL. 

Mr.  Knapp.  Let  me  say,  Mr.  Chairman,  I  can  only  repeat  that 
it  would  be  possible  for  a  community  to  bring  a  complaint  which 
would  challenge  the  reasonableness  of  all  the  rates  of  all  the  roads 
and  in  all  directions  in  which  that  community  was  interested.  They 
can  do  that  now.  No  bill  pending  here  increases  the  jurisdiction 
of  the  Commission  over  the  subject-matter. 

The  question  is  what  order  in  such  a  case  the  Commission  shall 
have  power  and  authority  to  make  after  it  has  heard  all  the  facts, 
and  while  I  must  admit  that  a  complaint  could  be  brought  which 
would  challenge  the  whole  area  of  rates  of  a  system,  or  of  more  than 
one  system,  I  think  it  would  be  very  difficult  for  the  complainant 
to  furnish  the  proof  which  would  warrant  the  Commission  in  mak- 
ing an  order  reducing  those  rates  simply  on  the  ground  that  they 
were  unreasonable,  and  I  say  further  that  if  that  proof  should  be 


64 

made,  if  facts  sbould  be  established  which  fairly  lead  to  that  conclu- 
sion, I  do  not  know  any  reason  why  such  an  order  should  not  be 
made.  If  the  entire  New  York  Central  system  is  charging  the  pub; 
lie  for  its  services  a  sum  which  gives  to  that  sj'stem  a  greater  reve- 
nue than  it  is  entitled  to  secure,  and  imposes  upon  the  great  public 
which  that  system  serves  a  greater  transportation  burden  than  it 
ought  to  bear,  and  if  facts  are  proven  which  sustain  that  conclusion, 
I  do  not  know  any  reason  why  it  should  not  be  reached. 

SHALL  THE   DETERMINATION   OF  WHAT   RAILROADS   SHALL 

CHARGE   THE   PUBLIC   REMAIN   WHOLLY   IN 

THEIR  OWN  HANDS. 

You  see,  gentlemen,  to  say  otherwise  it  seems  to  me  forces  this 
alternative:  The  railroads  being  free  from  any  legal  restraint  in 
establishing  their  tariffs,  and  being  under  legal  obligation  to  enforce 
those  tariffs,  when  they  are  once  established,  upon  everybody,  if 
there  is  no  way  in  which  those  tariffs  can  be  changed  when  they  are 
proven  to  be  wrong,  or  because  they  are  oppressive  or  relatively 
unjust,  then,  of  course,  the  determination  of  what  the  railroads  of 
this  country  shall  earn,  what  they  shall  charge,  is  in  their  own 
hands,  and  I  am  not  prepared  to  admit,  Mr.  Chairman,  that  the 
owners  and  managers  of  our  railway  systems  are  entitled  to  say 
themselves  what  the  public  shall  pay  and  that  their  determination 
in  that  regard  is  to  be  practically  incapable  of  alteration;  which 
brings  us  right  back  again  to  the  question,  in  such  case  as  that, 
after  complaint  and  notice  and  due  hearing,  and  opportunity  for 
the  carriers  to  show  every  fact  upon  the  question  presented,  if  those 
facts  establish  with  reasonable  certainty  that  charges  complained 
of  are  wrong,  the  question  is,  Shall  the  Commission  have  authority 
to  say  what  the  carriers  are  to  do  to  correct  the  wrong?  .  That  is  all 
there  is  of  it. 

The  Chairman.  There  is  a  little  more  than  that.  Judge,  in  the 
abstract.  The  question  as  you  presented  it  is  undoubtedly  the  cor- 
rect position.  I  do  not  think  that  anybody,  or  but  very  few  persons, 
would  gainsay  that,  outside  of  those  who  are  directly  interested; 
but  here  is  the  situation:  Up  to  this  time  that  claim  on  the  part  of 
the  railway  companies  has  been  acquiesced  in  by  the  lawmaking 
power.  The  proposition  now  is  to  change  the  location  of  that  right 
to  fix  rates.  Of  course  that  means  antagonism.  There  are  friends 
of  the  old  method,  the  present  method,  and  there  are  friends  of  the 
new.  There  is  an  effort  being  made  to  get  legislation,  legislation 
that  is  urged  and  legislation  that  is  opposed.  Now,  as  you  are  pre- 
senting the  question,  and  I  think  rightly,  on  the  part  of  the  railway 
the  argument  is:  Here  is  a  surrender  of  a  right  which  is  of  inesti- 
mable advantage  to  us,  and  it  involves  our  entire  possible  prosper- 
ity, if  the  power  that  is  to  be  granted  is  to  be  as  comprehensive  as 
Judge  Knapp  has  just  claimed.  The  object  being  to  get  remedial 
legislation,  there  are  difficulties  in  the  way  of  securing  that. 


66 


WOULD  SOME  INTERMEDIATE  METHOD  BE  EFFECTIVE? 

What  I  was  trying  to  get  from  you  in  your  view  in  the  presen- 
tation of  that  was  this  thought:  Is  there  some  immediate  method, 
as,  for  instance,  the  establishment  of  the  power  of  the  Commission 
over  a  particular  rate,  over  a  rate  that  is  specific  and  especially 
complained  of,  and  of  marked  importance,  that  could  be  the  sub- 
ject of  legislation  without  taking  from  the  company  the  present 
•power  that  they  enjoy  over  their  whole  system  of  rates? 

Mr.  Knapp.    Well,  Mr.  Chairman 

The  Chairman.  You  can  see  that  much  opposition  might  be 
removed  in  the  way  of  securing  very  beneficial  legislation. 

Mr.  Knapp.  I  think  I  perfectly  appreciate  the  position  which 
many  railroads  take.  I  think  I  appreciate  its  very  great  importance. 
As  I  remarked  a  couple  of  days  ago,  my  study  of  this  question,  a 
study  which  I  try  to  make  careful  and  conscienti(^s,  leads  me  to 
great  conservatism.  I  am  not  disposed  to  advocate  any  radical  al- 
teration in  this  law,  nor  any  extraordinary  increase  in  the  authority 
of  the  Commission.  It  is  not  necessary  for  me  to  advocate  that  the 
Commission  be  given  the  authority  in  respect  of  making  an  order 
which  the  Corliss  bill  proposes,  for  that  question  is  for  you.  My 
duty  is  to  explain  to  you  exactly  the  present  situation,  to  have  you 
understand  precisely  the  extent  to  which  the  Commission's  author- 
ity now  goes,  to  point  out  the  authority  which  I  think  it  would  have 
if  this  measure  were  adopted.  It  is  for  you,  gentlemen,  to  say 
whether  that  authority  shall  be  granted  or  not.  I  am  not  covetous 
of  increasing  authority. 

The  Chairman.    No;  I  do  not 

NO  FOUNDATION  FOR  THE  CHARGE  THAT  THE  COMMISSION 

HAS  FAILED  TO  PERFORM  ITS  DUTIES 

UNDER  THE  PRESENT  LAW. 

Mr.  Knapp.  It  is  often  charged,  Mr.  Chairman,  that  the  Inter- 
state Commerce  Commission  has  disregarded  its  obligations  under 
this  law,  failed  to  perform  the  duties  which  it  might  perform,  and 
is  eagerly  reaching  out  for  great  authority  with  a  view  of  making 
itself  a  body  of  enormous  consequence.  There  is  no  foundation  for 
the  charge;  no  facts  can  be  adduced  to  support  the  contention.  The 
most  careful  study  of  the  reports  which  the  Commission  has  made 
to  the  Congress,  and  the  recommendations  which  have  been  era- 
bodied  in  its  reports,  the  most  careful  examination  of  the  things  it 
has  done,  the  views  it  has  expressed  in  deciding  cases,  and  other- 
wise attempting  to  administer  the  present  law  are  a  complete  refu- 
tation of  any  such  charge. 

ORDER  OF  THE  COMMISSION  IS  OF  NO  BINDING  FORCE,  AND 

NOT  OBLIGATORY  UNTIL  WRIT  ENJOINING  OBEDIENCE 

IS  ISSUED  BY  THE  COURT  UPON  PETITION 

OF  THE  COMMISSION. 

There  is  this  first  question  about  what  order  the  Commission 
shall  have  authority  to  make.     Then  there  is  the  other  question  of 


66 

whpn  that  order  is  made  what  shall  be  its  effect,  how  shall  it  be 
enforced,  how  shall  it  be  reviewed?  At  the  present  time,  as  jou  are 
aware,  the  order,  when  made,  is  merely  one  to  cease  and  desist,  and 
it  has  no  selfenforcibilitj.  It  is  obligatory  in  any  legal  sense  upon 
nobody.  The  carrier  can  continue  to  disregard  it  as  long  as  it  likes, 
and  the  only  way  to  give  any  effect  to  the  order  is  to  file  a  bill  in 
equity  in  the  circuit  court  and  ask  the  court  to  enforce  that  order. 
In  such  a  suit  the  findings  of  the  Commission  constitute  a  prima 
facie  case,  which  has  the  effect,  of  course,  of  putting  the  burden 
upon  the  carrier  to  show  that  the  Commission  has  made  a  mistake. 

PROCEDURE  SHOULD  BE  REVERSED,  AND  THE  ORDER  OF  THE 

COMMISSION  BE    OBLIGATORY    UNTIL    SET  ASIDE  BY 

THE  COURT  UPON  PETITION  OF  THE  CARRIER. 

Now,  I  shall  ask  this  Committee  to  make  a  change  in  the  law 
in  the  respect  I  am  now  discussing.  If  we  go  no  further  at  present, 
Mr.  Chairman  mid  gentlemen,  in  developing  our  theories  of  railway 
regulation,  we  ought  at  least  to  go  now  to  the  extent  of  providing 
that  when  the  Commission  makes  an  order,  although  it  be  only  an 
order  to  cease  and  desist,  that  the  carrier  must  obey  that  order  or 
itself  go  to  court  to  get  rid  of  it.  It  is  not  a  proper  attitude  for  the 
Commission  to  be  in,  to  sit  in  a  judicial  way,  bearing  both  sides  of 
a  controversy,  and  render  a  decision,  and  then  being  obliged  to  go 
to  court  to  enforce  its  own  order,  to  become  the  prosecutor  in  sup- 
port of  the  judgment  which  it  has  rendered.  And  without  any 
hesitation,  without  having  heard  any  objections  to  it  from  any 
source,  I  ask  you  at  least  to  adopt  so  much  of  the  Corliss  bill  as  will 
change  the  method  of  procedure. 

The  scheme  is  a  very  simple  one.  The  Commission  makes  an 
order  and,  as  I  say,  suppose  it  is  only  an  order  to  cease  and  desist 
from  doing  the  thing  that  is  complained  of.  The  provision  is  that 
in  case  the  cr.rrier  fails  to  ^comply  with  that  order,  that  is,  by 
actually  ceasing  and  desisting  from  doing  the  thing  and  sets  about 
doing  something  else,  why,  then,  penalties  should  accumulate 
against  it,  which  could  be  enforced  by  the  proper  district  attorney. 

Now,  the  carrier  may  file  its  bill  to  stay  the  order,  so  that  the 
theory  and  purpose  are  to  put  the  carrier  in  the  position,  so  that 
when  an  order  is  made  against  it,  it  must  either  do  something  differ 
ent  fi'ora  what  it  was  doing  or  go  to  court  to  show  that  that  order 
is  wrong  and  to  get  rid  of  it.  If,  for  example,  the  rate  in  con- 
troversy is  a  dollar,  when  the  Commission  finds  upon  all  the  facts 
that  it  is  unreasonable,  and  makes  an  order  to  cease  and  desist  from 
charging  a  dollar,  then  I  want  the  railroad  to  be  put  in  a  position 
where  it  has  got  to  make  some  change  in  the  rate,  if  it  is  not  more 
than  half  a  cent,  or  go  to  court  and  get  a  change  in  the  order  which 
condemned  the  rate. 

THE  CHANGE  PROPOSED  NOT  A  RADICAL  ONE. 

This  change  is  not  a  radical  one;  not  at  all.  When  you  bear  in 
mind  that  the  present  findings  of  the  Commission  constitute  a 
prima  facie  case,  you  will  see  that  the  burden  is  now  on  the  carrier 


67 

in  the  Circuit  Court,  and  of  course  under  the  procedure  proposed  the 
burden  would  still  be  upon  the  carrier.  It  would  have  to  file  its 
bill  and  maintain  it. 

Now,  in  that  connection  I  want  you  to  observe  again  that  the 
authority  proposed  to  make  an  order  is  not  to  make  any  kind  of  an 
order.  This  bill  does  not  go  on  that  theory,  and  I  am  not  advocat- 
ing that  while  the  jurisdiction  of  the  Commission  is  limited  to  a 
case  where  there  is  plain  violation  and  afterwards  a  full  disclosure 
of  the  facts  that  then  it  can  go  on  and  make  any  kind  of  an  order  it 
has  a  mind  to. 

That  is  not  contemplated  nor  advocated.  It  can  only  make 
such  an  order  in  the  first  instance  as  is  justified  by  a  fair  considera- 
tion of  those  facts.  And  the  Circuit  Courts  may  stay  that  order  if 
they  are  satisfied  that  it  is  not  a  just,  reasonable,  and  lawful  order. 
In  other  words,  Mr.  Chairman,  the  Commission  is  given  authority  in 
such  a  case  to  make  a  just,  reasonable,  and  lawful  order.  And  the 
Courts  may  review  the  case  to  see  whether  the  Commission  has  ex- 
ceeded this  authority. 

HOW  THE  CARRIER  WILL  GET  "ITS  DAY  IN  COURT." 

The  Chairman.  Upon  the  supposition  that  a  railway  makes  a 
rate  to  charge  |1  and  the  Commission  says  "You  must  charge  but 
90  cents,"  there  is  no  judicial  investigation  in  which  you  pass  upon 
that  question  of  his  right  to  charge  that  sum.  To  that  extent,  the 
extent  of  that  10  cents,  there  is  a  confiscation  of  a  right  without 
the  intervention  of  the  Court,  without  his  having  his  day  in  Court, 
and  without  compliance  with  the  constitutional  provision  that  no 
man  shall  be  deprived  of  his  property  without  due  process  of  law. 

Mr.  Knapp.  Now,  I  will  put  it  in  this  way.  The  Congress  has 
plenary  and  exclusive  authority.  If  a  carrier  was  charging  a  dollar 
for  interstate  cerriage  you  could  pass  a  law  to  fix  that  rate  of  90 
cents.  The  carrier  could  file  a  bill  in  Court  on  the  theory  that  that 
was  an  unconstitutional  statute,  and  the  Court  Tv;ould  stay  the  ex- 
ecution of  that  statute  until  the  case  was  heard  and  determined. 
In  that  way  the  carrier  gets  its  day  in  Court.  Now,  similarly,  that 
is  just  what  would  happen  in  this  case. 

Now,  it  has  practically  come  to  this,  to  determine  what  au- 
thority the  Commission  shall  have  to  make  an  order;  it  is  left  with 
the  Courts,  then,  to  say  whether  that  order  shall  be  stayed  pending 
the  trial  of  the  suit  brought  for  a  perpetual  stay.  I  think  that  is 
a  reasonable  and  workable  plan. 

Mr.  Mann.  You  want  a  change  of  the  law  so  that  the  order 
will  go  into  effect  at  once.  Suppose  that  that  were  done  and  you 
make  an  order,  what  is  the  result?  The  railroad  company  does 
nothing 'in  the  way  of  filing  a  bill.  What  is  the  result?  Maybe 
the  railway  company  pays  no  attention  to  it. 

THE  PENALTIES  WOULD  ACCUMULATE. 

Mr.  Knapp.  Yes;  but  then  the  penalties  would  accumulate 
against  it.  That  is  the  theory  of  the  bill.  And  in  a  suit  to  recover 
those  penalties,  I  think  the  carrier  •could  not  question  the  lawful- 


68 

ness  of  the  order.  So  on  this  theory  the  carrier  is  put  in  a  posi- 
tion where  it  must  either  do  something  or  go  to  Court  to  get  rid  of 
the  order.  I  think  that  is  a  very  simple,  worliable,  and  not  oppres- 
sive method  of  procedure.  It  does  not  shift  the  Iburden  of  proof; 
it  would  not  materially  change  the  course  of  litigation. 

Undoubtedly,  if  the  Commission  made  an  order  which  deprived 
the  carrier  of  its  property-  against  its  constitutional  rights,  the  car- 
rier could  file  a  bill  whether  it  was  permitted  to  do  so  by  this  law 
or  not,  just  as  it  could  if  it  was  fixed  by  statute,  without  any  per- 
mission. But  the  proposition  is  to  give  the  Commission  authority 
to  make  a  just,  reasonable,  and  lawful  order  on  the  facts  disclosed. 
Now,  I  say  a  Court  can  review  that  action  and  decide  whether  that 
action  is  just,  reasonable,  and  lawful  on  the  facts,  although  that 
order,  if  a  statute,  might  not  be  unconstitutional. 

QUESTION  OF  THE  RIGHT  OF  CONGRESS  TO  DELEGATE  RATE- 
MAKING  POWER  TO  THE  COMMISSION  SETTLED. 

Mr.  Stewart.  There  is  no  doubt  that  Congress  can  fix  a  rea- 
sonable rate  constitutionallv,  but  is  there  not  much  doubt  under  the 
decisions  whether  it  can  delegate  that  power  to  the  Commission? 

Mr.  Knapp.  Not  the  slightest,  Mr.  Stewart.  That  has  been 
over  and  over  again  settled. 


STATEMENT    OF    HON.    CHARLES    A.     PROUTY,    INTERSTATE 
COMMERCE  COMMISSIONER,  BEFORE  THE  HOUSE 

COMMITTEE. 

Tuesday,  April  22,  1902. 

Mr.  Chairman  and  gentlemen  of  the  committee,  as  Chairman 
Knapp  has  stated,  Governor  Fifer  and  I  are  obliged  to  leave  Wash- 
ington tomorrow,  and  if  we  say  anything  we  will  be  compelled  to 
say  it  now. 

If  a  community  comes  to  the  Commission  and  makes  its  com- 
plaint, and  that  complaint  is  heard  and  the  Commission  decides 
that  it  is  well  taken  and  that  community  wronged,  one  of  two 
things  must  happen.  Unless  that  order  goes  into  effect  the  commu- 
nity continues  to  be  wronged  and  it  has  no  redress.  If  it  goes  into 
effect  and  is  wrong,  the  railroad  is  wronged  and  it  has  no  redress. 
In  other  words,  somebody  must  suffer.  And  the  question  is,  if  a 
competent  tribunal  has  heard  the  case  as  an  arbiter  and  decided  that 
question,  why  the  decision  of  that  tribunal  ought  not  to  remain 
effective  pending  a  review  of  that  question  in  a  Court.  That  is  the 
Droposition. 

IS  THE  COMMISSION   INCOMPETENT  OR  IS  THE   LAW  AT 

FAULT? 

This  law  has  been  in  effect  over  fifteen  years,  and  it  has  pro- 
duced in  no  material  degree  the  thing  which  it  was  intended  to  pro- 
duce. If  the  fault  is  with  the  Commission  who  are  administering 
that  law  the  people  ought  to  know  it.    The  law  provides  that  a  Com- 


69 

missioner  may  be  removed  for  incompetency,  and  I  am  inclined  to 
thinlv  that  we  have  somebody  at  the  White  House  now  who  would 
enforce  that  part  of  the  law.  If  this  Commission  is  incompetent,  it 
should  be  removed.  If  the  trouble  is  with  this  law,  if  no  com- 
mission, competent  or  incompetent,  can  enforce  this  law,  then  the 
law  should  be  amended;  and  it  is  your  duty  to  find  out  whether 
the  Commission  is  or  is  not  competent,  whether  it  has  or  has  not 
neglected  to  enforce  the  provisions  of  this  law. 

DISCRIMINATION   IN   PUBLISHED   RATES,  AND   THE  EVIL   OF 

TOO  HIGH  A  RATE. 

There  are  certain  evils  which  this  bill  seeks  to  remedy.  One 
evil  is  the  payment  of  the  rebate,  the  departure  from  the  published 
rates.  Another  evil  is  discrimination  in  the  published  rates.  There 
are  to-day  the  grossest  discriminations  in  the  published  rates  in 
favor  of  the  Standard  Oil  Company.  Another  evil  is  of  too  high  a 
rate.  My  own  belief  is,  and  has  been,  that  the  great  danger  is  a 
rate  absolutely  too  high.  I  do  not  want  to  belittle  the  evil  of  dis- 
crimination; it  is  the  sore  spot,  it  is  the  thing  which  hurts  to-day, 
but  it  is  temporary  in  its  effects,  and  the  other  thing  is  permanent 
in  its  effect,  and  if  you  will  indulge  me  for  fifteen  minutes  I  want 
to  present,  rather  than  discuss  the  details  of  this  bill,  my  idea  on 
that  subject. 

In  order  to  do  that,  I  want  you  gentlemen  to  consider  for  half 
a  minute  what  railroad  competition  is.  You  are  told  that  we  ought 
to  rely  on  railroad  competition  to  regulate  the  rates  of  this  country 
or  to  secure  a  sufficiently  low  rate.  What  is  railroad  ocmpetition 
under  the  Act  to  Regulate  Commerce? 

PRESENT  RAILROAD  CONTROL. 

I  have  in  my  hand  here  an  article  written  by  a  gentleman 
named  Cunniff.  i  do  not  know  him,  but  I  have  taken  this  from  the 
World's  Work  for  February,  1902.  I  say  I  do  not  know  him,  and  I 
attach  no  particular  importance  to  his  opinion,  but  I  use  these  ta- 
bles merely  for  the  sake  of  reference.  What  do  these  show?  Here 
we  have,  first,  the  Vanderbilt  system,  which  embraces  19,500  miles 
of  railroad.  I  do  not  take  Mr.  Cunniflf's  opinion  for  that;  that  fact 
is  shown  by  the  records  of  the  Interstate  Commerce  Commission — 
with  this  exception:  The  Northwestern  Railroad  is  reckoned  as  a 
part  of  that  system,  and  while  everybody  understands  that  the 
Northwestern  Railroad  is  a  part  of  the  Vanderbilt  system,  the  rec- 
ords of  our  office  would  not  demonstrate  that  fact.  But  you  can 
safely  say  to-day  that  the  Vanderbilt  system  embraces  19,500  miles. 

iSText  we  have  the  Pennsylvania  system.  That  system  is  set 
down  here  as  embracing  14,350  miles;  but  that  computation  in- 
cludes the  Baltimore  and  Ohio  Railroad.  The  Chesapeake  and  Ohio 
Railroad  and  the  Norfolk  and  Western  Railroad  are  treated  as  con- 
trolled jointly  by  the  New  York  Central  and  the  Pennsylvania.  I 
think,  in  fact,  they  are  controlled  by  the  Pennsylvania  Railroad  and 
should  be  added  to  the  Pennsylvania  system;  making  the  system 


70 

18,000  miles,  in  round  numbers.  We  know  that  from  the  records  of 
the  Interstate  Commerce  Commission. 

We  have  next  here  the  Morgan-Hill  system,  which  embraces 
roads  in  which  Mr.  Morgan  is  most  prominently  interested  and 
which  he  controls,  and  they  aggregate  here  37,500  miles.  Now,  with 
respect  to  that,  we  know  from  the  sworn  testimony  before  the  Com- 
mission that  Mr.  Morgan  and  Mr.  Hill  control  the  18,000  miles  of 
road  embraced  in  the  Northwestern  merger.  It  is  known  and  as- 
sumed by  everybody  that  Morgan  controls  the  Southern  Railroad. 

Since  this  article  was  written  I  have  added  G,000  miles  to  the 
mileage  given  here,  because  Mr.  Morgan  to-day  controls  the  Louis- 
ville and  Nashville.  It  is  somewhat  remarkable  how  these  things 
happen  up  in  New  York.  There  is  a  flurry  in  the  stock  market  and 
something  has  been  done,  and  nobody  knows  exactly  what.  Some- 
body says  Mr.  Gates  has  it,  and  another  man  says  Mr.  Rock  Island 
Road  has  it;  but  in  two  or  three  days  Mr.  Morgan  says,  in  reply  to 
an  inquiry,  ''I  own  it.'' 

Add  that  to  this  statement  here  and  you  have  43,000  miles  of 
road  which  Mr.  Morgan  controls  to-day.  I  think  I  can  say  in  respect 
to  that,  taking  this  transaction  in  Louisville  and  Nashville,  that  tiie 
testimony  given  before  the  Commission,  and  from  the  records  of  the 
Commission,  that  that  statement  is  correct. 

We  have  here  now  the  Gould  system,  of  which  the  Missouri 
Pacific  is  the  nucleus,  and  about  which  I  do  not  pretend  to  know  so 
much,  and  I  do  not  know  whether  the  records  of  the  Commission 
would  show  it  or  not.  I  have  to  take  that  system  alone,  as  Mr. 
Cunniflf  gives  it,  at  1G,000  miles. 

The  chairman  suggests  that  when  the  reports  for  this  year  are  in 
they  will  probably  show  that  fact.  That  leaves  the  Harriman  sys- 
tem, which  is  set  down  here  at  21,000  miles;  and  in  respect  to  that  1 
will  say  we  know  that  from  sworn  testimony  given  by  Mr.  Harriman 
before  our  Commission. 

Now,  gentlemen,  what  is  the  gra;id  total?  One  hundred  and 
fourteen  thousand  miles  of  railroad  controlled  by  five  different  sys- 
tems,-or  five  different  persons.  You  have  left  the  Atchison  system, 
the  Rock  Island  system,  the  San  Francisco,  and  the  Milwaukee,  and 
those  are  the  only  important  independent  systems  there  are.  Those 
aggregate  21,000  miles.  When  you  have  added,  gentlemen,  to  the 
114,0()0  miles  that  I  have  stated  the  21,000  miles  now  independent 
you  have  a  monopoly  of  the  railroads  of  this  country  in  the  hands  of 
five  men.  You  say  there  are  200,000  miles  of  railroad.  That  is 
right;  there  are  200,000  miles  of  railroad.  There  are  70,000  miles  of 
railroad  left.  But  what  railroad?  Seventy  thousand  miles  of  rail- 
road that  does  not  begin  anywhere  and  does  not  go  anywhere; 
70,000  miles  of  railroad  that  is  absolutely  dependent  for  its  existence 
upon  those  five  great  systems. 

Now,  gentlemen,  you  may  talk  about  railroad  competition,  you 
may  rely  upon  railrdad  competition  to  reduce  rates  or  to  regulate 
rates,  but  there  is  no  railroad  competition.  When  five  men  seated 
around  a  table  in  the  city  of  New  York  can  say  what  the  rate  on 
grain  shall  be  from  Kansas  City  to  the  Gulf  and  from  Kansas  City 
to  the  seaboard,  from  the  Missouri  River  to  the  seaboard,  and  from 


71 

the  grain  fields  of  Chicago  and  Duluth,  you  have  not  any  more  com- 
petition in  the  movement  of  grain.  When  five  men  can  sit  down 
around  a  table  in  the  city  of  New  York  and  say  the  rates  shall  be  so 
and  so,  "if  at  the  end  of  the  year  this  thing  does  not  pan  out  to  be 
as  we  think  it  ought  to  we  will  make  it  right,"  you  have  a  pooling 
arrangement  that  can  never  be  reached  by  any  law.  One  of  two 
things  has  got  to  result.  Either  fhese  five  men  will  agree  upon  somr 
modus  Vivendi,  upon  some  apportionment  of  the  territory  of  this 
country,  as  they  have  done  in  England  to-day,  with  the  result  that 
they  have  the  highest  freight  rate  there  in  the  world,  or  they  will 
become  partners,  or  one  man  -^ill  buy  out  the  other  four. 

FREIGHT  RATES  TOUCH  EVERYTHING. 

What  is  a  freight  rate?  A  freight  rate  is  a  tax  on  everything 
which  enters  into  the  life  and  commerce  of  this  country.  You  have 
not  got  a  stich  of  clothes  on  you  which  has  not  borne  that  tax.  Yon 
do  not  eat  a  single  thing  which  does  not  bear  that  tax,  unless  you 
dig  it  in  your  own  garden  or  buy  it  from  some  laborer  who  digs  it  in 
his  garden.  And  to  say  that  one  man  shall  determine  what  every 
other  species  of  property  shall  pay  to  his  property  is  a  thing  which 
I  do  not  believe  the  people  of  the  United  States  will  submit  to.  Mr. 
Hill  says  in  his  sworn  testimony  that  a  man  who  charges  too  high 
a  rate  is  a  pirate.  I  do  not  think  that.  The  question  of  the  rate,  a 
reasonable  rate,  is  a  matter  of  opinion.  Mr.  Hill's  opinion  might  be 
one  way  and  your  opinion  might  be  the  other  way. 

So  I  do  not  think  that,  at  all.  But  I  do  think  this:  The  history 
of  all  time  has  shown  that  when  you  give  a  single  individual  power 
over  the  property  or  the  liberty  of  his  fellow-man  and  do  not  re- 
strain or  control  that  power,  he  abuses  it.  If  the  railroad  property 
of  this  country  has  the  right,  without  control,  to  say  what  tribute 
other  property  shall  pay  to  it,  it  will  abuse  that  power. 

Now,  you  say  that  is  a  theory.  Y^ou  say  your  rates  are  still 
falling.  These  operations  began,  you  see,  years  ago.  I  say  to  you 
that  rates  are  not  still  falling;  I  say  to  you  that  rates  are  advanc- 
ing— that  there  is  a  steady  advance  of  rates  in  all  parts  of  this 
country  to-day.  This  is  shown  by  the  published  schedules  on  file 
with  the  Interstate  Commerce  Commission.  It  is  shown  even  by  the 
rates  per  ton  per  mile,  which  is  a  poor  indication  of  the  actual  rate, 
but  which  has  advanced  for  the  last  two  years,  and  undoubtedly, 
when  our  computations  are  completed,  they  will  show  a  higher  rate 
per  ton  per  mile  for  the  year  ending  June  30,  1901,  than  for  the 
previous  year. 

If  you  could  sit  in  an  office,  as  I  do,  receiving  complaints  from 
all  parts  of  the  country  of  advances  here  and  advances  there,  you 
would  understand  in  a  way  that  you  can  not  understand  how  this 
process  goes  on. 

THE  COST  OF  MOVING  FREIGHT  DECREASING  AND  THE  TRAF- 
FIC INCREASING. 

There  is  another  thing.  I  am  sorry  I  have  not  time  to  elaborate 
more,  and  I  know  it  is  rather  uninteresting  testimony,  but  it  is  im- 


72 

poi'tant  that  you  gentlemen  should  have  these  things  in  mind,  be- 
cause they  go  to  the  basis  of  this  whole  question. 

The  cost  of  transporting  traffic  is  decreasing  every  day.  Grades 
are  reduced,  curves  are  cut  out,'  the  power  of  locomotives  is  in- 
creased, and  the  result  is  to  reduce  the  cost  of  transportation.  The 
sworn  testimony  of  the  manager  of  the  Lake  shore  Railroad  before 
the  Interstate  Commerce  Commission  not  long  ago  showed  the 
average  carload  of  grain  from  Chicago  to  New  York  was  60,000 
pounds.  Fifteen  years  ago  that  was  probably  30,000.  He  said  that 
the  carload  of  the  future  would  be  nearer  100,000.  He  further  said 
that  one  engine  would  draw  50  cars^from  Chicago  to  Buffalo,  and 
doubtless  the  same  engine  would  draw  the  same  number  of  cars 
from  Buffalo  to  New  York. 

Now,  observe  for  a  minute  what  that  means.  In  1885  the  aver- 
age carload  was  30,000  pounds,  and  the  cost  at  the  present  rate  from 
Chicago  17^  cents.  The  railroad  would  receive  for  hauling  that 
train  load  |2,625.  To-day  the  average  carload  is  00.000  pounds,  and 
the  railroad  would  receive  for  hauling  it,  gross,  |5,250.  When  the 
average  load  is  100,000  pounds  the  railroad  will  receive  for  hauling 
those  50  cars  |8,725.  Captain  Crammer  testified  that  on  this  line 
50  cents  a  train  mile  would  probably  cover  the  cost  of  movement. 
Taking  out  the  cost  of  movement,  would  leave  .«?2,100  in  1885;  $4,700 
in  1900;  |8,200  in  1901. 

There  is  another  thing.  The  traffic  on  these  railroads  is  in- 
creasing, and  as  you  increase  the  density  of  traffic  you  can  move  it 
cheaper;  the  rate  ought  to  decline.  These  gentlemen  say  that  the 
cost  of  their  supplies  is  increasing,  and  perhaps  they  are;  but  sta- 
tistics just  published  by  Bradstreet  show  that  for  the  year  ending 
December  31,  1901,  the  gross  revenues  of  the  railroads  increased  12 
per  cent  and  the  net  revenues  increased  IG  per  cent. 

Now,  why  is  it?  When  the  cost  of  moving  traffic  is  increasing, 
when  the  density  of  traffic  is  increasing,  when  gross  revenues  are  in- 
creasing, and  net  revenues  increasing  still  more  rapidly,  why  is  it 
that  the  freight  rate  also  is  increasing?  It  is  because  you  are  remov- 
ing railroad  competition. 

THE  SITUATION  CALLS  FOR  RELIEF. 

Now,  there  is  a  remedy  which  you  can  apply.  There  is  a  remedy 
which  is  perfectly  just  to  everybody,  and  that  is  the  remedy  which 
we  ought  to  apply.  If  you  ask  me  what  that  remedy  is  for  the  Steel 
Trust  I  will  say  I  do  not  know.  I  do  not  know.  I  am  told  that  trust 
charges  to-day  |14  more  for  rails  than  a  ton  of  steel  rails  costs. 
Now,  I  do  not  know  how  we  are  going  to  prevent  it.  But  if  you  ask 
rae  what  the  remedy  is  for  railroad  monopoly,  I  have  no  difficulty, 
and  you  have  no  difficulty,  in  answering  that  question.  The  courts 
in  every  State  of  the  Union  have  decided,  the  Supreme  Court  of  the 
United  States  has  decided,  that  the  railroad  is  a  public  servant, 
that  its  rate  is  subject  to  public  supervision,  and  the  only  way  in 
which  you  can  correct  these  evils  is  to  exercise  in  some  form,  in 
some  proper  form,  some  supervision  over  the  railroad  rate. 


'70 
/O 


AN  ILLUSTRATIVE  CASE— COMPLAINT  OF  RATES  ON  HAY. 

In  closing  what  I  have  to  say  I  will  take  a  particular  case.  In 
1900  the  railroads  operating  in  official  classification  territory  ad- 
vanced the  rate  on  hay  from  sixth  class  to  fifth  class.  They  tried  to 
do  it  for  ten  years,  but  had  been  unable  to  do  so.  Certain  shippers 
of  hay  brought  a  complaint  before  the  Interstate  Commerce  Com- 
mission complaining  that  that  advance  was  unreasonable  and  asked 
an  investigation,  and  we  have  been  investigating  at  great  length 
that  question. 

It  was  said  in  the  argument,  and  perhaps  appears  in  the  brief, 
that  the  average  advance  on  all  hay  shipped  in  official  classification 
territory  would  be  about  2  cents  a  hundred  pounds  only,  a  thing  so 
insignificant,  said  the  attorneys  for  the  railroads,  that  no  shipper 
who  pays  it  could  realize  it.  This  classification  does  not  apply  to  all 
the  hay  shipped  in  the  United  States. 

It  applies,  however,  to  perhaps,  one-half,  perhaps  two-thirds  of 
it.  But  suppose  for  one  minute  it  applied  to  all  the  hay  shipped  in 
the  United  States.  What  does  it  mean?  We  raised  last  year  50,000,- 

000  tons  of  hay  in  the  United  States.  Of  that  50,000,000  tons,  we 
shipped  by  rail  7,000,000  tons.  This  is  an  advance  of  40 cents  on  every 
ton,  or  of  nearly  |3,000,000  on  all  the  hay  shipped  in  this  country — 
?3, 000,000  taken  out  of  the  pockets  of  somebody  and  put  into  the 
pockets  of  the  owners  of  our  railroad  properties. 

Now,  gentlemen,  if  that  is  right,  it  ought  to  be  done,  and  I  want 
to  say  to  you  that  I  do  not  know,  although  I  have  heard  all  this  tes- 
timony, whether  I  think  it  is  right  or  wrong.  I  say,  if  it  is  right,  it 
ought  to  be  done;  if  it  is  wrong,  there  ought  to  be  some  way  in  which 
the  people  of  this  country  who  are  interested  in  that  matter  can 
obtain  relief. 

AN    EFFECTIVE    SUPERVISORY    CONTROL    OVER    RATES    THE 

ONLY  MEANS  OF  RELIEF. 

Now,  there  is  no  way  in  which  they  can  obtain  relief  unless  you 
provide  some  tribunal  which  has  power  to  inquire  into  the  reason- 
ableness of  that  rate  and,  if  it  finds  the  rate  unreasonable,  to  make 
it  right.  That  is  the  sum  total  of  my  proposition. 

I  do  not  care  to  discuss  to-day  the  ways  or  the  means  of  doing 
it.  It  is  said.  Let  him  bring  a  suit.  Mr.  Hill  said  in  his  testimony 
before  the  Commission,  "Let  him  bring  suit."  Who  is  going  to 
bring  suit?  Somebody  who  is  damaged  to  the  extent  of  |25 — and  no 
one  person  may  be  damaged  more?  Mr.  Harriman  said  in  his  testi- 
mony, "Let  him  bring  a  suit."  I  said  "Please  cite  the  Commission 
one  instance  in  which  a  court  has  ever  rendered  final  judgment 
granting  relief  in  a  case  like  that."   He  said,  "I  am  not  a  lawyer." 

1  said,  "You  have  money  enough  to  hire  a  lawyer;  get  the  best  coun- 
sel you  can,  try  and  furnish  this  Commission  with  a  memorandum 
showing  one  single  case  in  which  it  has  ever  happened  that  a  court 
of  final  resort  has  given  damages  for  a  thing  of  that  sort."  He  has 
never  furnished  that  memorandum,  and  my  belief  is  that  no  such 
case  can  be  found. 


74 

While  the  unreasonable  rates  and  the  unreasonable  exactions: 
of  railroad  companies  have  elected  legislatures,  abolished  courts, 
and  led  to  the  most  violent  political  convulsions,  no  ease,  no  relief, 
has  ever  been  obtained  from  the  courts. 

And  that  is  the  reason  why  the  States  have  exercised  that 
power.  The  members  of  this  committee  come  from  16  different 
States.  Of  those  IG  States,  10  either  make  or  supervise  the  rates. 
I  include  in  that  the  State  of  Michigan.  The  State  of  Michigan  has 
never  made  or  supervised  the  freight  rates.  It  has  made  the  pas- 
senger rates,  and  its  commissioner  has  some  power  over  the  pas- 
senger rates.  But  in  the  other  9  States  they  make  the  rates  direct. 
Illinois  does,  Iowa  does,  Missouri  does,  Alabama  does.  As  I  have 
said  to  you,  I  do  not  advocate  that;  I  think  the  railroad  companies 
should  make  their  rates  first.  But  when  those  rates  have  been  made, 
in  some  way  or  other  they  must  be  supervised. 

A  REASONABLE  COMPENSATION  MUST  BE  AFFORDED  TO  THE 

CARRIER. 

Now,  a  rate  is  profit.  You  have  to  deal  with  that  rate  in  the 
most  delicate  manner.  You  have  to  be  extremely  careful  that  you 
do  not  do  any  injustice  to  the  railroads.  You  can  not  protect  the 
public  unless  in  some  w^ay  or  other  you  do  it. 

Xow,  there  is  just  one  other  observation,  and  that  is  that  you 
must  not  only  do  it,  but  you  must  do  it  now.  Said  a  Senator  of  the 
United  States  to  me  the  other  day,  "We  can  control  these  rates."^ 
"Yes,"  said  I.  Said  the  Senator,  ''We  can  control  them  whenever  we 
see  fit."  "No,  Senator,"  said  I,  "you  can  not."  The  Supreme  Court 
of  the  United  States  has  declared  in  the  most  positive  terms  that 
the  legislature  may  either  directly  or  through  a  commission  control 
the  rates,  with  this  limitation,  that  it  must  allow  to  the  railway 
company  a  reasonable  compensation  for  the  service  performed,  and 
unless  it  does  that  the  rate  established  is  an  illegal  rate.  You  have 
got  to  deal  with. this  question  finallj^,  and  you  ought  to  deal  with 
this  question  immediately. 

COMPLAINTS  BY  THE  HUNDRED. 

There  is  one  thing  more  I  want  to  say.  It  is  said  that  there  is 
no  complaint  to-day  of  too  high  a  rate.  I  had  that  looked  up  the 
other  day,  and  in  the  last  three  years  there  had  been  filed  with  tlu^ 
Interstate  Commerce  Commission  807  complaints  against  advances 
in  rates  or  against  rates  which  were  alleged  to  be  too  high.  Al- 
though the  Commission  has  no  power  to  grant  any  relief  there  are 
pending  before  it  now  for  investigation  that  number  of  cases.  All 
it  can  do  is  to  investigate  and  recommend. 

The  800  complaints  have  been  informal  complaints.  The  com- 
plainants have  asked  the  Interstate  Commerce  Commission  what 
could  be  done,  and  the  reply  has  been  that  the  Commission  can  in- 
vestigate, and  would  be  glad  to  investigate,  at  the  expense  of  the 
Government,  any  questions  of  that  sort  that  the  complainants  de^ 


75 

sired,  and  would  make  what  order  it  could;  but  that  there  is  no 
way  at  the  present  time  in  which  that  order  can  be  enforced.  The 
almost  invariable  reply  is — and  I  have  received  in  the  last  few  days 
and  have  now  on  my  desk  some  of  those  letters — that  unless  we 
can  do  something  for  them  and  are  certain  of  it  that  they  do  not 
want  the  railroad  to  know  that  they  have  complained. 

Mr.  Mann.  It  seems,  then,  that  where  the  law  gives  authority 
to  the  individual  shipper  discriminated  against  or  charged  too  high  a 
rate  to  come  before  you  that  they  do  not  choose  to  avail  themselves 
of  that  opportunity  at  all. 

Mr,  Prouty.  Not  ordinarily,  Mr.  Mann.  They  ordinarily  say 
this,  that  unless  we  can  get  some  speedy  and  immediate  relief  do 
not  say  anything  to  the  railroad  about  it. 

Mr.  Mann.  They  could  get  speedy  and  immediate  relief  in- 
dividually, so  far  as  you  are  concerned,  in  the  way  of  damages? 

Mr.  Prouty.     Damages  do  not  amount  to  anything. 

Mr.  Mann.  You  sue  a  street-railway  company  for  charging  10 
cents  fare,  and  if  the  courts  holds  they  have  to  refund  the  5  cents  it 
will  stop  it. 

Mr.  Prouty.  If  you  are  a  philanthropist  enough  to  carry  it  to 
the  Supreme  Court  for  the  benefit  of  your  fellow-men,  all  right. 

Mr.  Mann.  We  are  philanthropists  enough  to  provide  a  Com- 
mission to  carry  it  there;  that  is  the  point. 

Mr.  Prouty.  Then  provide  the  Commission  with  some  au- 
tority  to  do  it.  I  want  to  say  this,  that  this  Commission  has  said 
uniformly  to  complainants  within  the  last  thi'iee  years,  I  think,  if 
you  want  your  complaints  investigated  and  steps  taken  that  can 
be  taken  to  give  relief  it  shall  be  done,  and  all  we  ask  you  to  do  is 
to  sign  a  complaint.    That  has  been  the  rule  of  the  Commission. 

STATEMENT   OF  HON.  JOSEPH   W.   FIFER,  INTERSTATE   COM- 
MERCE COMMISSIONER,  BEFORE  THE  HOUSE 

COMMITTEE. 

Tuesday,  April  22, 
Mr.  FiFER.  Mr.  Chairman  and  gentlemen  of  the  Committee: 
the  very  full  and  complete  discussion  of  this  question  made  by  my 
colleagues  makes  it  unnecessary  for  me  to  detain  the  committee 
very  long.  Now%  we  have  heard  from  Judge  Prouty  in  regard  to 
the  great  combinations  that  have  taken  place  in  this  country  in 
railroads  and  the  combinations  that  are  now  going  on.  I  think  all 
men  of  reflection  will  agree  that  that  practically  obliterates  rail- 
road competition  on  which  the  people  could  rely  in  the  past  for  a 
reasonable  rate  and  that  another  remedy  must  be  pursued,  and  that 
is  the  remedy  of  control. 

Gentlemen,  railroads  are  not  engaged  in  business  for  their 
health.  They  have  money  invested  in  those  properties  in  order  to 
make  a  profit,  and  the  fruitage  of  railroading  is  the  price  that  they 
get  for  the  carriage  of  persons  and  property.  When  that  is  under- 
stood vou  can  verv  well  understand  the  further  fact  why  it  is  that 


76 

railroads  refuse  to  yield  the  smallest  fraction  of  their  right  to  fix 
the  rate  and  to  control  it,  as  far  as  they  may,  after  it  is  fixed. 

SHALL  THERE  BE  ANY  CONTROL  OVER  RATES  AND  WHERE 

SHALL  IT  BE  LODGED? 

Now,  it  is  easy  enough  to  say  that  the  railroads  must  be  con- 
trolled. It  is  quite  a  different  question  to;  say  how  they  shall  he 
controlled.  When  you  touch  the  right  of  railroads  to  fix  their 
rates  or  to  control  their  rates,  you  touch  the  tenderest  nerve  in 
their  whole  anatomy.     They  will  yield  that  right  very  reluctantly. 

The  question  is  for  this  committee  and  for  Congress  to  say 
whether  there  shall  be  control.  If  railroads  are  to  fix  their  rate's 
in  the  first  instance  and  then  make  changes  at  their  pleasure — if 
that  is  the  decision  of  the  committee  and  of  Congress — that  is  the 
end  of  the  controversy.  But  if  you  say  there  shall  be  control,  then 
who  shall  do  the  controlling?  Who  are  you  going  to  make  the 
depository  of  the  power  to  control  railroads?  It  must  be  done  by 
some  human  agency.  Who  shall  be  that  agency  and  how  shall  it 
be  done?  is  the  question,  it  seems  to  me,  for  the  decision  of  the 
committee;  and  when  you  come  to  that  question  you  have  your 
finger  on  the  nerve  of  the  whole  situation,  because  railroads  have 
no  other  means  of  bringing  money  into  their  treasuries  except  the 
price  they  get  for  carrying  persons  and  property. 

Now,  I  think  everybody  will  agree,  outside  of  a  few  railroad 
men,  that  there  must  be  this  control;  that  it  will  not  do  to  con- 
stitute the  railroads  the  judges  in  their  own  case;  and  this  is  con- 
ceded by  some  railroad  men,  that  as  long  as  human  nature  remains 
in  its  present  imperfect  moral  condition,  if  they  are  to  exercise  that 
power  that  power  will  be  abused,  and  I  do  not  say  that  in  order 
to  disparage  railroad  men,  for  I  think,  on  the  average,  they  are  just 
as  good  and  as  honest  as  other  people. 

IMPUTATION  THAT  REQUIRES  NO  ANSWER. 

It  has  been  frequently  said  in  some  newspapers  and  periodicals, 
nnd  by  people  in  conversation,  that  the  Commission  desires  to  fix 
these  rates  in  the  first  instance,  in  order  to  get  great  power  in  their 
own  hands  and  to  make  big  men  of  themselves.  Now,  gentlemen, 
that  is  a  mistake.  The  Commission  has  at  no  time  asked  that  power- 
to  be  conferred  upon  them.  They  do  not  believe  that  it  is  proper  or 
expedient;  but  they  do  believe  that  the  Interstate  Commerce  Com- 
mission or  some  other  body  ought  to  exercise  the  power  to  regulate 
and  adjust  rates  after  they  are  made.  The  question  is,  shall  it  be 
the  Commission  or  shall  it  be  the  courts?  Somebody,  in  the  end, 
must  decide  these  questions. 

We  have  said  that  the  railroads  ought  to  fix  these  rates  in  the 
first  instance.  There  are  200,000  miles  of  railroads  in  the  United 
States,  speaking  in  round  numbers.  It  would  be  impractical  and 
inexpedient  for  a  commission  of  five  persons  to  fix  those  rates  in  the 
first  instance.   But  we  do  say  that  some  body — the  Commission  or 


77 

some  other  body — should  have  the  right  of  control  and  supervision 
over  those  rates,  and  when  you  approach  that  question  you  are  con- 
fronted with  a  very  difficult  problem,  I  am  willing  to  admit. 

AVERAGE   TIME   CONSUMED   IN   SECURING   FINAL   DECISION, 

FOUR  YEARS. 

A  question  comes  before  the  Commission  in  regard  to  an  exces- 
sive rate.  Great  injustice  may  have  been  done,  and  the  Commission 
so  find.  Under  the  present  law  the  railroad  company  can  take  an 
appeal  to  the  courts,  and  on  the  statement  of  Judge  Prouty  on  an 
average  it  takes  four  years  to  secure  a  final  decision  by  the  courts. 
In  the  meantime  the  evil  is  continued.  That,  gentlemen,  is  one  of 
the  difficulties.  The  question  is  as  to  whether  the  order  of  the  Com- 
mission shall  go  in  force  at  once  or  whether  the  railroads  shall  be 
permitted  to  open  up  the  whole  question  by  going  into  the  courts 
and  taking  an  appeal. 

CONGRESS  MUST  PROVIDE  MEANS  OF  SPEEDY   HEARING. 

Now,  gentlemen,  some  provision  ought  to  be  made  by  Congress 
for  a  speedy  hearing  upon  the  decisions  of  the  Commission.  There  is 
one  of  the  great  troubles.  It  discourages  men  from  coming  before 
the  Commission  and  incurring  expense  in  these  hearings,  when  the 
case,  if  they  get  a  decision  in  their  favor,  will  go  into  the  courts 
and  remain  buried  there,  as  it  has  been,  in  some  instances,  I  believe, 
for  a  period  of  six  years;  and  when  it  comes  out  there  must  be  a  re- 
examination of  the  whole  question  over  again  to  see  whether  condi- 
tions have  changed,  and  there  is  a  necessity  of  making  a  change  in 
the  rate  as  originally  decided  by  the  Commission. 

Now,  the  courts,  by  reason  of  the  progress  and  inventions  that 
we  are  constantly  making,  are  constantly  fighting  on  the  skirmish 
line,  trying  always  to  extend  the  provisions  of  the  common  law  to 
meet  the  changed  condition  of  affairs;  but  when  they  got  down  to 
this  question  of  railroad  traffic,  it  seemed  necessary  to  supplement 
the  common  law  by  an  enactment  of  Congress,  and  that  gave  us  the 
present  Interstate  Commerce  Act. 

REMEDIES  THROUGH  THE  COURTS  ARE  IMPRACTICABLE  AND 

INADEQUATE. 

Now,  it  is  said  if  the  Commission  decides  that  a  rate  is  unreas- 
onably high  in  itself,  and  it  is  buried  in  the  courts  for  years,  that 
these  shippers  have  a  remedy  to  recover  from  the  railroad  the 
amounts  of  their  damage,  provided  the  finding  of  the  Commission 
is  sustained  by  the  court. 

Gentlemen,  that  is  simply  remanding  the  people  back  to  the 
rights  already  granted  them  by  the  common  law.  They  have  that 
right  already.  But  when  a  man  is  injured  to  the  extent  of  |100  or 
$500,  or  it  may  be  only  |25,  he  can  not  afford  to,  and  he  never  will, 
sue  a  railroad  company  to  recover  his  damages. 

When  a  complaint  is  made  before  the  Commission  and  a  man 


78 

has  the  courage  to  make  that  complaint,  it  is  not  only  on  his  own 
behalf,  but  if  he  wins  out  and  gets  a  decision  in  his  favor  by  the 
Commission,  and  finally  by  the  courts,  that  is  a  benefit  to  the  whole 
community,  because  these  rates  are  to  be  general  and  universal; 
and  that  was  one  object  in  the  passage  of  this  act,  to  afford  a  remedy 
that  the  common  law,  however  much  the  courts  might  try  to  ex- 
pand its  provisions  and  apply  it  to  the  new  conditions,  did  not  give. 

THE  PUBLIC  MUST  SUFFER  FOR  YEARS  PENDING  FINAL  DE- 
CISION OF  THE  COURTS. 

Now,  there  is  a  great  difficulty  just  at  that  point.  The  Commis- 
sion decides  that  a  rate  is  excessive  in  itself.  If  that  is  to  be  bind- 
ing on  the  railroads,  and  take  effect  at  once  or  within  a  few  days, 
giving  them  a  reasonable  time  to  comply  with  the  order  of  the  Com- 
mission, then  it  is  said  on  the  part  of  the  railroads,  if  the  order  of 
the  Commission  is  finally  reversed  by  the  courts,  that  they  have 
paid  out  money  that  they  should  not  have  been  required  to  pay,  or 
carried  this  freight  at  a  less  rate  than  they  were  entitled  to  have. 

On  the  other  hand,  if  the  case,  after  it  is  decided  in  favor  of  the 
shippers  by  the  Commission,  can  be  buried  in  the  courts,  then  the 
shippers,  the  whole  community,  possibly  half  a  State,  must  suffer, 
and  they  come  out  of  litigation  and  the  controversy  just  as  empty 
handed  as  they  go  in,  after  the  lapse  of  four  years,  and  after  they 
have  incurred  expense  and  the  expenditure  of  much  time. 

CONGRESS  HAS  POWER  TO  PROVIDE  A  SPEEDY  REMEDY. 

Mr.  Stewart.  Judge  Prouty  has  said  very  well  that  these  cor- 
porations are  public  servants. 

Now,  why  should  they,  being  public  servants,  their  very  life 
being  due  to  their  taking  a  tax  from  all  property  of  the  United 
States — why  should  they  have  the  establishing  of  that  tax  in  the 
first  instance? 

Mr.  FiFER.  That  is  a  question  for  this  Committee  and  Congress 
to  determine.  The  courts  have  already  decided  that  the  original 
power  of  controlling  the  railroads  resides  in  the  Congress  of  the 
United  States,  and  I  take  it  that  Congress  can  pass  an  arbitrary  law 
that  shall  be  reasonable  and  shall  not  be  confiscatory  and  fix  these 
rates  primarily  and  originally.  I  do  not  know  why  that  could  not  be 
done.  The  courts  have  said  further  that  Congress  has  the  power  to 
delegate  this  power  to  the  Interstate  Commerce  Commission. 

Mr.  Mann.  How  long  do  you  think  it  would  take  your  Commis- 
sion to  say  what  should  be  the  rate  from  Chicago  to  New  York  and 
from  Kansas  City  or  Louisville  or  Minneapolis  to  New  York,  not  to 
mention  Baltimore  and  Norfolk  and  Boston? 

Mr.  FiFER.     That  is  a  very  wide  question. 

Mr.  Mann.     That  is  what  I  thought. 

DISCRIMINATION  BETWEEN  CAR-LOAD  AND  LESS  THAN  CAR- 
LOAD RATES. 

Mr.  FiFER.  It  is  an  open  door,  that  leads  into  a  very  wide  field. 
We  have  a  case  now  before  the  Commission  of  the  middle  AYest 


79 

shippers  agaiust  the  Transcontinental  Line  and  the  shippers  of  the 
Pacific  coast.  It  grew  out  of  a  differential  betAveen  a  carload  and  a 
part  carload  rate.  The  wholesale  jobbers  of  the  middle  West  com- 
plained that  that  differential  was  too  high,  and  that  it  shut  them 
out  of  the  jobbing  business  on  the  Pacific  coast.  They  sold  to  the 
man  who  retails,  and  therefore  were  compelled  to  ship  on  less  than 
n  carload  rate,  and  that  is  higher  than  a  carload,  whereas  the 
Pacific  coast  jobber  ships  always  in  a  carload,  and  puts  it  right  in 
his  storehouse  and  redistributes  it  from  there. 

Now,  in  that  case  there  was  that  complaint,  and  we  allowed  the 
lawyers  and  the  litigants  to  take  their  own  time,  and  I  think  we 
were  over  one  year  in  taking  the  testimony  before  it  was  finally 
argued  and  submitted  to  the  Commission. 

Mr.  Mann.  Can  you  give  me  any  idea — I  do  not  know  anything 
about  it,  and  you  are  on  the  Commission — as  to  now  long  it  will 
take  to  pass  a  question  like  that? 

Mr.  FiFER.  I  just  cited  that  instance  to  show  you.  Sometimes 
we  can  determine  those  questions  in  less  time  than  we  suppose  we 
can  when  we  enter  upon  an  investigation.  I  could  not  say,  Mr. 
Mann. 

Mr.  Mann.  Of  course  I  do  not  mean  to  give  the  number  of  days 
or  weeks  or  months,  but  whether  it  would  be  an  easy  matter  or  not. 

Mr.  FiFER.  You  would  have  to  go  to  the  different  localities. 
The  law  under  which  we  are  now  acting  authorizes  the  Commission 
to  go  to  different  localities,  and  that  is  done  for  the  purpose  of 
affording  litigants  an  opportunity  to  be  heard  without  incurring  a 
great  expense. 

We  go  to  Chicago  and  San  Francisco  and  Boston  and  New  York 
and  all  around,  because  if  there  is  a  complaint  on  the  part  of  mer- 
chants in  uny  of  these  localities  it  would  be  impossible,  and  n  very 
great  hardship  upon  them,  for  them  to  come  to  Washington  with  a 
great  cloud  of  witnesses,  incurring  a  great  loss  of  time  and  great 
expense,  and  it  would  be  a  practical  denial  of  justice;  so  the  law  has 
wisely  provided  that  the  Commission,  or  any  member  of  it — one — 
can  go  out  and  take  this  testimony  in  different  localities. 


STATEMENT    OF    HON.   JUDSON     C.   CLEMENTS,   INTERSTATE 
COMMERCE    COMMISSIONER,   BEFORE   THE    HOUSE 

COMMITTEE. 

Saturday,  April  26,  1902. 

Mr.  Cle^ients.  Mr.  Chairman,  there  are  some  features  of  the 
general  subject  of  regulation  which  ought  to  be  referred  to  in  con- 
nection with  the  practical  details,  which  I  suppose  it  is  the  object 
of  the  Comniittee  and  of  all  of  us  to  get  down  to,  and  only  so  far 
as  I  think  necessary  for  a  proper  consideration  of  those  will  I  refer 
to  the  subject  in  general. 

The  magnitude  and  importance  of  these  questions  and  the  diffi- 
culties and  complexities  surrounding  them  are  not  to  be  wondered 
at,  and  they  are  sufficient  to  caution  anyonet  who  approaches  this 
subject,  either  from  the  standpoint  of  legislation  or  administration, 


80 

ajxainst  overconfidence  in  being  able  at  once  to  formulate  suitable 
and  effective  legislation  in  all  particulars. 

There  are  men  living  vv'ho  were  born  before  there  was  a  mile  of 
railroad  built  in  this  countrv,  and  vet  we  now  have  nearlv  200,000 
miles.  It  is  a  business  which  reaches  everybody,  touches  every  other 
business,  and  upon  which  everA'body  is  more  or  less  dependent. 
This  immense  property'  has  been  constructed  under  public  franchises 
which  have  authorized  the  promoters  to  take  private  property  for 
public  use  upon  the  theory  that  they  perform  a  public  service^  and 
therein  this  business  is  distinguished  in  principle,  fundamental  prin- 
ciple, from  the  ordinary  private  business  in  which  men  engage  with- 
out public  regulation.  Another  feature  distinguishes  it,  and  that  is 
that  every  railroad  is  of  necessity  to  most  people  a  monopoly.  There 
are  several  roads  for  the  same  people  at  the  trade  centers.  There 
were  formerlv  more  than  there  are  now,  since  modern  combinations 
have  been  perfected;  but  after  all,  the  great  body  of  the  people  who 
need  protection  from  injustice  most  are  those  who  can  patronize 
only  one  railroad. 

Hence  long  since  has  grown  up  the  idea  that  it  is  perfectly  cor- 
rect and  necessary  to  regulate  this  business.  It  has  more  to  com- 
mend regulation  than  many  other  things  that  have  been  regulated. 
From  the  beginning  in  this  country  it  is  a  matter  of  history  that 
public  authority — legislative  authority  of  the  States,  at  least — has 
always  regulated  the  tolls  at  grist  mills,  over  turnpikes,  and  mono- 
polies of  that  sort  in  which  the  public  are  interested,  in  which  it 
was  believed  that  the  public  was  entitled  to  fair  and  equal  treat- 
ment as  between  man  and  man.  It  is  true  that  is  a  small  matter 
now  as  compared  to  this  business.  It  was  an  important  matter, 
however,  in  the  former  days  before  railroads  and  the  steam  mills 
and  merchant  mills  that  have  been  brought  about  at  trade  centers; 
it  was  a  vital  matter  then,  and  the  public  authority  did  not  hesitate 
to  regulate  it  on  the  sole  ground  that  it  was  a  monopoly  though  a 
private  business.  In  addition  to  the  fact  that  the  railway  is  a 
monopoly  to  most  people  there  is  the  further  fact  that  it  was  created 
only  by  grant  of  public  authority  for  a  public  purpose,  to  take 
private  property  in  order  to  do  the  public  business. 

But  I  will  pass  from  that  question,  because  it  is  settled  by 
judicial  interpretation  that  there  is  competent  authority  and  ade- 
quate reason,  both,  for  regulation.  Sometimes  when  these  matters 
are  presented  those  who  oppose  regulative  legislation  speak  of  it  as 
a  great  innovation,  as  revolution,  as  something  unheard  of,  and 
therefore  I  have  made  this  reference  to  these  matters.  For  a  long 
time  the  people  of  the  country  got  along  without  any  demand  for 
regulating  railroads,  although  they  had  the  authority  in  the  Con- 
stitution, formed  long  before  a  road  was  built,  for  that  purpose,  and 
upon  which  the  present  law  was  enacted.  But  the  warfare  between 
railroads  and  between  rival  communities  and  markets  and  products 
had  not  been  made  so  sharp  that  there  was  necessity  for  regulation. 


81 
I 

THE  NECESSITY  FOR  REGULATION  OF  RAILWAY  RATES  BE- 
CAME IMPERATIVE  AS   STRIFE  BETWEEN   COMMU- 
NITIES FOR  BUSINESS  DEVELOPED. 

The  roads  were  far  apart;  they  were  separate  lines.  They  had 
not  formed  these  aggregations,  and  great  trade  centers  had  not 
been  built  up  by  the  facilities  of  the  railroads,  and  therefore  the 
necessity  for  regulation  for  a  long  time  did  not  exist,  and  for  a 
still  further  time  the  sharpness  of  friction  and  warfare  and  strife 
between  communities  and  individuals  in  business  and  the  carriers 
was  not  such  as  to  make  imperative  the  demand  for  legislation 
such  as  resulted  in  the  passage  of  the  present  law,  which  was  en- 
acted in  1887.  But  for  ten  j^ears  before  that  time  it  was  a  matter 
of  public  agitation.  It  was  before  both  Houses  of  Congress  for 
about  that  time,  and  this  law  was  the  fruit  of  that  agitation  and 
contention. 

INTERSTATE  COMMERCE  ACT  PASSED  IN  1887  WAS  TENTATIVE 
AND  EXPERIMENTAL,  AND  NO  AMENDMENT  MADE 

SINCE  1889. 

It  is  not  strange  that  Congress  at  that  time  did  not  make  a 
perfect  law.  It  was  a  great  field,  a  great  subject;  there  were  great 
interests,  great  difficulties  involved.  It  was  tentative  and  experi- 
mental, and  two  years  later,  in  1889,  following  the  provision  of  the 
statute  which  requires  the  Commission  annually  to  report  to  Con- 
gress and  make  suggestions  as  to  needed  legislation  to  perfect  the 
law,  certain  recommendations  were  made,  and  Congress  took  it  up 
again  and  amended  it  in  several  particulars,  one  of  which  was  to 
include  the  shipper  under  the  criminal  provisions  of  the  law.  Ho 
was  originally  not  under  the  criminal  features. 

Another  provision  then  added  to  the  law  was  one  making  it 
a  crime  for  a  shipper  to  underbill  or  misdescribe  the  products  he 
shipped  so  as  to  cheat  the  railroads  by  marking  a  package  a  certain 
kind  of  freight  which  would  go  at  a  low  rate,  whereas  it  was  a 
higher  grade  of  freight  that  went  at  a  higher  rate.  Those  were 
two  important  provisions  put  in  at  that  time  at  the  instance  of  the 
carriers  and  recommended  by  the  Commission.  They  thought  that 
was  just  and  went  toward  making  an  adequate  law  protecting  both 
interests  with  impartiality. 

Since  that  time  there  has  been  practically  no  amendment  to 
this  law;  none,  I  might  say,  except  that  the  supplemental  act  which 
relates  to  the  matter  of  taking  testimony,  which  grew  out  of  what 
is  known  as  the  Counselman  case. 

It  has  been  now  about  thirteen  years  since  the  law  was  over- 
hauled in  the  particulars  to  which  I  have  referred.  The  Commis- 
sion has  in  obedience  to  a  requirement  of  the  act  year  after  year 
made  suggestions  as  to  what  it  thought  was  necessary  to  give  effect 
to  the  purposes  of  the  law,  and,  as  you  well  know,  has  annually 
provoked  a  campaign  of  criticism,  which  has  already  been  referred 
to  on  the  part  of  those  who  undertake  to  defeat  the  proposed  legis- 


82 

lation  by  charging  the  Commission  with  greed  and  anxiety  for  un- 
limited power.  I  will  not  waste  time  on  that,  I  think  the  Com- 
mittee understands  that  this  Commission,  acting  oflScially  and  un- 
der oath,  has  no  interest  in  the  matter  except  to  endeavor  to  carry 
out  its  duties  faithfully  as  time  and  experience  show  them  to  be. 
That  is  what  it  is  trving  to  do. 

RAILROAD  CHARGES  AGGREGATE  THREE  TIMES  AS  MUCH  AS 
THE  GOVERNMENT  CUSTOMS  DUTIES  AND 
.  INTERNAL  REVENUE  COMBINED. 

The , United  States  collects  in  customs  duties,  or  did  for  the 
year  ending  June  30,  1901 — the  same  year  to  which  I  have  been 
referring — 1238,000,000;  from  the  internal  revenue,  all  sources, 
$305,000,000;  miscellaneous  sources,  |41,000.000,  making  a  total  of 
^584,000,000,  which  is  little  more  than  one-third  of  what  the  rail- 
roads collect  in  a  year. 

I  refer  to  these  figures  now  only  to  show  the  magnitude  of  this 
matter  and  to  illustrate  and  emphasize  what  I  believe  must  be  ad- 
mitted by  all,  and  that  is  that  so  long  as  the  carriers  doing  this 
business,  immense  as  it  is,  are  allowed  to  fix  their  own  rates  upon 
their  own  considerations,  looking  to  their  own  interests,  as  all  men 
do — thej^  are  not  peculiar  in  that  respect — it  is  not  to  be  assumed 
that  every  shipper  will  have  a  just  and  reasonable  rate  to  ship  upon. 
In  the  scramble  for  gain  such  a  conclusion  as  that  would  be  unreas- 
onable. Hence  the  necessity  for  some  middle  moderate  course  to 
take  care  of  both  sides  in  respect  to  what  is  just  and  reasonable. 

If  either  of  you  and  I  have  a  controversy  about  accounts,  for 
instance,  or  anything,  and  we  can  not  agree  about  it,  you  do  not  try 
the  case;  neither  do  I.  We  are  all  bound  in  the  society  of  govern- 
ment, in  order  to  guarantee  justice  to  both  sides  and  to  all,  through 
the  instrumentality  of  public  tribunals — impartial,  just,  and  fair. 
That  is  the  theory  of  our  whole  Government.  It  is  declared  in  the 
first  section  of  the  Act  to  Regulate  Commerce  that  every  rate  shall 
be  just  and  reasonable,  and  that  every  rate  that  is  not  so  is  unlaw- 
ful and  forbidden.  We  are  told  that  this  did  not  create  any  new  law; 
that  it  only  disclosed  what  was  common  law.  But  if  it  was  common 
law — and  I  concede  it  was,  at  leasj:  in  respect  to  a  reasonable  rate — 
why  was  it  put  into  a  section  of  this  act?  Did  that  make  it  any  more 
the  law  than  it  was  before?  Not  at  all.  It  was  declared  there  for 
the  reason  that,  although  common  law,  it  was  nothing  but  a  beau- 
tiful but  dormant  principle  which  had  never  had  substantial  appli- 
cation. 

REMEDIES    THROUGH    THE    COURTS    THEORETICAL,    BUT 

IMPRACTICABLE. 

The  shipper  could  not  go  into  Court  because  he  had  been 
charged  five,  one,  or  several  dollars  too  much  on  a  single  shipment 
and  maintain  a  suit  which  would  cost  him  a  hundred  dollars  or  more 
in  the  end,  even  if  successful,  and  in  contest  with  a  great  corpora- 
tion, with  its  salaried  lawyers,  who  are  paid  from  one  year's  end  to 


83 

another  to  take  care  of  all  its  cases.  The  individual  could  not  cope 
with  his  adversary  in  such  a  light  as  that  and  get  redress,  although 
he  had  a  theoretical  remedy  at  common  law.  I  challenge  anyone  to 
find  a  recorded  case  in  any  Court  which  ever  gave  back  to  a  man 
one  dollar  because  he  had  been  charged  more  than  a  reasonable 
rate. 

It  is  practically,  I  repeat,  only  a  theoretical  remedy.  It  is  mock- 
ery to  tell  a  man  in  such  case  that  he  has  his  remedy  in  Court.  It  is 
worse  than  giving  a  man  a  stone  when  he  asks  for  bread.  He  can 
not  avail  himself  of  it.  The  record  shows  he  never  did.  The  reasons 
why  he  did  not  are  apparent  to  everj^  man, 

FIFTEEN  YEARS'  EXPERIENCE  HAS  SHOWN  THAT  THE  INTER- 
STATE COMMERCE  ACT  IS  DEFECTIVE. 

Well,  why  did  Congress  declare  the  principle  of  the  common 
law  in  the  first  section  of  this  act?  Manifestly  to  give  it  some  vital- 
ity. They  followed  that  declaration  up  with  other  provisions  in- 
tended to  give  it  effect,  for  left  alone  it  does  not  amount  to  anything 
more  than  a  last  year's  spread-eagle  declaration  of  a  political  party. 
We  come  together  in  party  assemblies  from  time  to  time,  and  after 
suflflcient  'Syhereases"  each  denounces  everything  pretty  much  the 
other  has  done  and  seeks  favor  by  popular  declarations  sometimes 
too  general  for  practical  civilization.  To  leave  the  declaration  that 
a  reasonable  and  just  rate  is  lawful  and  any  other  rate  is  unlaw- 
ful, unsupported  by  some  method  to  give  it  elfect,  is  worth  no  more 
than  one  of  these  campaign  declarations,  practically.  Hence  it  was 
followed  up  with  all  the  sections,  the  whole  of  which  simply  pro- 
vides certain  things  to  be  done  to  give  effect  to  that  fundamental 
declaration  that  rates  must  be  reasonable  and  just.  Now,  they  do 
not  give  effect  to  it.  After  an  experience  of  fifteen  years  they  fail 
to  do  it. 

Of  what  use  is  it  to  require  the  carriers  to  file  their  schedules, 
publish  and  print  them,  and  the  Commission  to  collect  reports  and 
publish  them,  and  do  all  the  other  minutiae  of  the  things  required 
to  be  done  in  this  act  by  the  Commission  or. by  the  Courts  in  the 
way  of  procedure,  investigation,  and  things  of  that  sort,  if  after  all 
that  is  done  it  is  still  left  where  it  was  before,  for  the  carrier  to  fix 
his  rate,  enforce  it  whether  reasonable  and  just  or  otherwise,  and 
there  is  nobody  .to  hinder  him. 

INVESTIGATION  OF  SOME  VALUE. 

I  will  not  say  that  the  public  investigation  of  these  questions 
has  not  been  of  value  in  general.   It  would  not  be  true  to  say  so. 

I  will  not  say  that  the  varied  and  constant  correspondence  con- 
ducted by  the  Commission  in  respect  to  complaints  of  discrimina- 
tions and  unreasonable  rates  presented  by  letter  to  us  and  disposed 
of  in  that  way  has  not  been  of  benefit.  We  do  the  best  we  can  to 
present  to  the  railroads  reasons  why  there  should  be  an  alteration 
here  or  there  in  such  cases,  some  of  which  suggestions  are  complied 
with  and  some  not.  In  the  same  way  the  carrier's  side  of  the  ques- 


84 

tion  is  presented  to  the  shipper.  1  will  not  say  that  all  of  this  is 
utterly  worthless  or  that  it  has  not  accomplished  a  good  deal  of  im- 
provement in  conditions.  After  all,  however,  the  substantial  thing 
that  was  aimed  at  is  largely  a  failure,  and  that  is  the  correction  of 
a  rate  that  is  wrong. 

THE  RATE  THE  VITAL  MATTER. 

For  what  intent  are  individuals,  associations,  firms,  and  corpo- 
rations authorized  to  file  complaints  with  the  Commission?  For 
what  intent  is  the  Commission  required  to  serve  notice  on  the  car- 
riers complained  against,  institute  an  inquiry,  have  a  hearing,  and 
make  a  report  thereon?  It  is  the  rate  that  is  complained  of.  The 
rate  is  the  basis  of  all  of  these  controversies.  Sometimes  there  is  a 
question  of  discrimination  in  respect  to  such  a  matter  as  not  fur- 
nishing cars  to  one  shipper,  while  they  are  furnished  to  other  ship- 
pers; but  these  are  rather  minor  matters  compared  to  the  one  con- 
tinuing thing  that  is  the  subject  of  complaint,  and  that  is  the  rate. 
It  all  goes  to  the  rate.  The  amount  you  pay,  or  the  amount  which 
you  pay  as  related  to  what  other  people  pay,  that  is  the  controversy. 

Now,  it  is  not  of  much  value  to  make  a  lot  of  regulations  about 
one  thing  and  another  and  still  leave  that  question  untouched.  To 
regulate"  all  around  the  one  thing  which  is  the  cause  of  the  trouble 
and  leave  that  unregulated  is  unprofitable.  This  brings  me  to  the 
question  as  to  the  authority  of  the  Commission  in  respect  to  a  rate 
when  it  is  complained  of  and  investigated,  and  I  shall  not  dwell 
upon  that.  It  seems  to  me  that  the  statement  of  the  whole  matter 
suggests  of  itself  that  if  there  is  to  be  any  remedy  it  must  be 
through  authority  in  some  board — somebody.  It  can  not  be  a 
Court,  because  the  Supreme  Court  has  decided  that  the  fixing  of 
the  rate  for  the  future  is  a  legislative  act,  and  Courts  can  not  legis- 
late under  the  Constitution.  Therefore  it  must  be  done  in  one  of 
the  ways  that  Congress  has  said.  Congress  itself  must  fix  the  rate 
or  authorize  somebody  else  to  do  it  in  a  limited  way,  if  it  is  to  be 
fixed  at  all.  Now,  if  the  time  has  not  arrived  that  we  are  convinced 
it  is  right  and  just  under  proper  safeguards  and  limitations  to  give 
a  certain  limited  authority  to  fix  by  review  the  rate  which  the  rail- 
roads have  first  fixed,  then  there  is  no  use  to  do  anything  more  than 
has  been  done. 

A   RAILWAY   SOLICITOR'S  APPEAL   TO   THE   COMMISSION   TO 
FIX  THE  RATE  TO  BE  CHARGED  IF  THE  RATE  COM- 
PLAINED OF  IS  FOUND  UNREASONABLE. 

I  want  to  read  to  you  the  utterance  of  a  distinguished  railroad 
lawyer  in  an  early  case  before  the  Commission.  To  get  down  to 
where  the  friction  comes  in  a  controversy  is  the  best  way  to  get  at 
the  question.  A  complaint  was  made  of  the  unreasonableness  of 
rates  on  coal  in  Pennsylvania,  and  Mr.  Johnson,  then  and  now,  I 
believe,  counsel  for  the  Pennsylvania  Railroal,  which  was  a  party  to 
the  case,  said  in  his  argument  to  the  Commission: 

"You  must  fix  this  rate  under  the  testimony  in  this  case,  and  not 
upon  the  argument  of  Mr.  Gowen;  for  while  he  gives  you  his  expe- 


85 

rience  as  a  railroad  manager,  that  can  not  help  yoii  unless  it  is  in 
accordance  with  testimony  given  under  oath  and  under  the  sanction 
of  cross-examination.  Under  the  testimony  only  will  j'ou  be  justi- 
fied in  saying  that  these  rates  are  so  extortionate  as  to  demand 
your  interference.  You  must  fix  the  rate  to  be  charged.  Mr.  Gowen 
sees  the  difficulty  which  will  beset  you  in  doing  this,  and  he  there- 
fore says  that  he  does  not  ask  you  to  fix  rates,  but  only  to  say  that 
the  present  one  is  unreasonable.  He  tells  you  that  after  you  have 
said  this,  and  after  you  have  established  the  principle  that  before 
the  carrier  names  his  rates  he  must  consult  with  the  shipper,  "these 
people"  will  come  together  and  fix  the  rates  themselves.  That  will 
not  do." 

"If  this  Commission  says  that  the  present  rates  are  unreason- 
able, they  must  say  so  because  there  is  a  different  rate  they  have 
determined  to  be  a  proper  one.  It  will  not  do  for  you  to  make  a 
general  finding  and  to  say,  "The  present  rates  are  unreasonable,  but 
we  do  not  know  what  they  ought  to  be.  We  can  not  fix  them  for 
you.  You  must  agree  upon  them  amongst  yourselves."  If  unreason- 
able, say  to  what  extent  they  are  unreasonable;  whether  to  the  ex- 
tent of  a  cent,  or  of  many  cents,  or  of  a  dollar  a  ton.  Would  it  be 
proper  for  you  to  lay  down  an  abstract  principle  that  would  lead 
to  endless  confusion  in  the  application?  That  would  put  all  at  chaos. 
For  Heaven's  sake  do  not  ever  make  the  matter  of  the  proper  rates 
for  carrying  coal  one  to  be  regulated  in  a  conference  between  the 
carrier  and  shipper.  If  you  have  been  convinced  by  these  petitioners 
that  the  present  rates  are  unreasonable  and  unjust,  then  say  what 
the  rates  ought  to  be.     This  will  be  your  duty." 

I  read  this  not  for  the  purpose  of  offering  an  apology  for  the  in- 
terpretation of  the  statute  by  the  Commission  as  then  constituted, 
with  that  recognized  jurist,  Judge  Cooley,  at  its  head,  but  I  read 
it  for  the  now  more  important  purj)Ose  of  illustrating  the  inefficiency 
of  the  act  as  since  construed.  "For  Heaven's  sake,"  says  this  eminent 
counsel,  "if  you  condemn  this  rate  it  is  because  you  have  in  mind  an 
idea  from  tlie  testimony  of  what  is  the  proper  rate.  Now,  when 
you  condemn  this,  say  what  the  other  is;  but  do  not  turn  it  over  to 
the  shippers  and  carriers  for  another  controversy,  and  another  and 
another,  with  endless  difficulty  and  confussion."  Suppose  the  rate 
complained  of  is  a  dollar,  to  use  an  illustration  which  was  used  by 
a  member  of  the  committee  yesterday,  and  the  complaint  is  that  it 
is  excessive  to  the  extent  of  20  cents,  and  it  is  alleged  that  it  ought 
to  be  not  over  80  cents;  that  this  is  reasonable,  and  anything  above 
it  is  unreasonable.  Then  the  Commission  serves  the  complaint  and 
takes  testimony,  and  after  a  careful  examination  of  several  months 
and  with  several  hundred  pages  of  testimony  of  numerous  witnesses 
railroad  officials,  and  all  interested,  takes  into  careful  account  all 
the  circumstances  and  conditions  that  can  be  ascertained  pertinent 
to  the  matter,  and  with  deliberation— not  with  the  haste  of  a  court- 
house proceeding,  but  with  all  the  time  that  is  necessary  to  devote 
to  it  for  a  careful  consideration  and  consultation — reaches  the  con- 
clusion that  90  cents  is  a  reasonable  rate. 


86 


A  REASONABLE  RATE  FOR  THE  FUTURE  OF  MORE  IMPORT- 
ANCE TO   THE  SHIPPER  THAN  ANY   RECOVERY 
ON  PREVIOUS  SHIPMENT. 

If  the  shipper  is  entitled  to  a  just  and  reasonable  rate,  he  is  en- 
titled to  it  to-day  and  all  the  time.  He  is  entitled  to  it  to  ship  on, 
not  for  a  cause  of  action  to  recover  |.5  on  some  shipment  he  made 
last  week,  which  he  can  not  go  after  at  all.  How  is  he  to  do  business 
on  the  chances  of  recovering  back  the  excess?  What  he  needs,  and 
what  the  law  declares  him  entitled  to,  is  a  rate  which  is  just  and 
reasonable  which  he  may  use  and  ship  under. 

Well,  now,  if  under  the  present  law  in  the  case  just  assumed 
the  reasonable  rate  stated  was  ascertained  by  the  Commission  and 
so  found  all  that  could  be  done  would  be  to  condemn  the  dollar  rate. 
If  90  cents  is  all  that  is  reasonable  the  ninetj'-first  cent  is  just  as 
unlawful  at  the  one-hundredth  cent.  The  ninety-second  is  just  as 
unlawful.  And  hence  it  was  that  the  Commisdon,  with  Judge 
Cooley  at  the  head  of  it,  determined  away  back  that  when  the  Com- 
mission found  that  a  carrier  was  doing  any  act  prohibited  under  this 
law,  ordering  them  to  cease  and  desist  from  that  act,  went  as  much 
to  one  part  of  a  violation  as  to  another,  and  that  the  inhibition  ap- 
plied as  well  in  the  case  stated  to  the  ninety-tirst  cent,  which  was  1 
cent  above  that  which  was  reasonable,  as  to  the  one-hundredth  cent, 
which  was  10  cents  above;  and  that  the  violation  of  law  found  was 
in  charging  any  part  of  the  excess,  and  therefore  it  was  competent 
to  make  the  orders  it  did  make,  which  were  as  broad  but  no  broader 
than  the  violation.  So  much  for  that.  I  have  presented  it  not  by 
way  of  criticism  of  any  decision,  but  for  the  purpose  of  illustrating 
the  necessity  of  ascertaining  what  is  the  reasonable  rate,  as  well  as 
what  is  the  unreasonable  one,  so  as  to  give  effect  to  what  is  a  ship- 
per's declared  right  under  this  law. 

REGULATION   OF   RATES   NO    HARDSHIP   TO    THE   CARRIER— 
AND  A  NECESSITY  OF  SOCIAL  ECONOMICS. 

Now,  is  that  any  great  hardship?  Doubtless  you  will  be  told 
by  some  of  the  gentlemen,  but  not  all  of  them,  whose  property  is  to 
be  regulated — that  is,  if  it  is  to  be  regulated;  I  do  not  know  whether 
it  is  or  not — that  this  is  unnecessary.  Of  course  they  do  not  want 
to  be  regulated  any  more  than  they  can  help;  that  is  natural;  that 
is  the  way  you  would  be,  and  the  way  any  of  us  would  be.  We  think 
we  can  trust  ourselves  to  do  justice  to  everbyody,  and,  therefore,  we 
do  not  need  any  regulation.  That  is  humanity,  but  that  is  not  so- 
ciety.   Society  can  not  rest  on  any  such  principle. as  that. 

The  Chairman.  May  T  interrupt  you  with  a  question  which  is 
pertinent  here? 

Mr.  Clements.     Certainly. 

The  Chairman.  I  wish  you  would  tell  the  Committee  if  it  was 
authorized  to  establish  a  rate  what  would  be  the  elements  of  cost 
of  transportation  that  would  enter  into  your  calculation  in  determin- 
ing that  rate.  It  is  a  comprehensive  question,  but  I  think  it  would 
be  beneficial  if  some  one  with  experience  and  authorized  thereby  to 
speak  would  tell  us  of  all  these  elements  of  cost.    What  would  you 


87 

look  to,  what  would  you  look  at  on  the  part  of  the  carrier,  in  the 
expense  and  all  of  that? 

Mr.  Clements.  The  Commission  has  in  several  cases  made 
order  of  rhat  sort,  and  while  I  can  not  stand  here  and  offhand  repeat 
all  the  elements  that  have  been  suggested  from  time  to  time  in  all 
these  various  cases,  I  do  recall  some  of  them,  perhaps  the  principal 
ones. 

The  Chairman.  If  you  could  give  them  to  us  I  would  like  to 
have  them  all,  as  they  have  appeared  iu  your  experience,  and  if  you 
would  rather  answer  the  question  on  Monday,  after  thinking  it  over, 
very  well. 

Mr.  Clements.  I  can  answer  in  a  general  way  I  think  now, 
and  if  it  occurs  to  me  later  on  that  I  have  omitted  anything  I  may 
make  further  answer. 

The  Chairman.     If  you  please. 

THE  ELEMENTS  THAT  ENTER  INTO  THE  DETERMINATION  OF 

RATES. 

Mr.  Clements.  One  of  the  things  that  would  be  considered  is 
the  distance  and  the  charges  made  for  like  distances  on  a  like  freight 
in  other  parts  of  the  country.  Another  is  the  value  of  the  freight, 
because  you  can  not  lay  as  much  charge  per  ton  per  mile  on  a  load 
of  straw  as  on  a  load  of  gold  dust,  and  you  have  to  take  into  account 
the  value  of  the  property  shipped,  the  risks  incurred  by  the  carrier, 
how  much  he  would  have  to  pay  in  the  event  it  was  burned  or  losr 
and  he  became  liable  for  it.  You  would  have  to  consider  the  weight 
of  the  article  in  comparison  with  the  space  it  would  occupy  in  the 
car,  because  the  carrier  can  put  perhaps  three  times  as  much  or  four 
times  as  much  grain  into  a  car  in  bulk  as  wagons  or  buggies  set  up 
or  some  agricultural  implements  which  take  a  good  deal  of  space 
and  yet  do  not  weight  so  much — furniture  and  things  of  that  sort. 

And  you  must  take  into  account  the  expenses  of  the  road,  its 
condition,  its  financial  condition,  so  far  as  you  can  ascertain  it.  It  is 
all  fraught  with  varying  details  and  difficulty ;  there  is  no  doubt 
about  that.  And  after  all,  the  best  that  any  railroad  man  can  do 
now  or  pretends  to  do,  the  best  that  any' other  man  or  the  Congress 
or  a  commission  can  do,  is  but  an  approximation,  because  there  are 
so  raanv  varving  conditions  and  articles.  Thev  must  be  classed, 
and  yetjf  you  classify  at  all  you  must  put  a  lot  of  articles  into  every 
class  that  are  not  exactly  alike  in  these  respects-  to  which  I  have 
referred — of  bulk,  weight,  value,  and  space  required  in  a  car.  There- 
fore it  is  that  on  some  articles  a  road  can  earn  less  per  ton  per  mile 
than  upon  others,  because  if  it  charges  on  the  lower  grades  of 
freight  the  same  rate  per  ton  per  mile  that  it  does  on  the  higher 
grades  it  would  be  prohibitory;  the  articles  would  not  be  moved  at 
all.  Therefore  they  are  bound  to  take  into  account  what  the  traffic 
will  bear,  and  by  that  I  do  not  mean  to  say  that  they  are  authorized 
to  go  as  high  as  it  will  bear;  but  in  considering  whether  they  will 
carry  the  article  at  all  or  not  they  must  consider  whether  or  not 
there  is  any  profit  to  them  after  paying  the  expense  of  the  move- 
ment of  that  freight. 


88 

All  of  these  are  matters  that  must  be  taken  into  account.  The 
Supreme  Court  said,  in  the  Nebraska  case,  I  think,  where  a  State 
undertook  to  fix  the  rates  on  all  articles  ou  all  roads,  that  it  must 
take  into  account  the  bonded  indebtedness  and  the  other  indebted- 
ness, of  stock  and  its  value,  market  value,  what  the  roads  earn. 
They  must  not  be  confiscated — that  is,  no  rates  must  be  made  which 
would  leave  them  no  profit. 

AN  ILLUSTRATION  CLOSE  AT  HAND. 

The  regulation  of  cabs  and  street  cars  in  Washington  is  inter- 
esting in  connection  with  the  contention  that  to  give  the  Commis- 
sion the  limited  authority  to  review  the  rates  made  by  the  carriers, 
for  the  purpose  of  correction,  not  creation,  would  be  revolutionary, 
radical,  unreasonable,  and  dangerous,  and  yet  right  here  in  this 
community  of  300,000  people,  the  capital  of  the  United  States,  bv 
authority  of  Congress  the  Commissioners  of  this  District  are  au- 
thorized, and  that  without  a  hearing,  to  fix  a  schedule  of  rates  for 
the  cabmen  of  this  city,  to  say  what  they  shall  charge  you  and  me. 
so  as  to  protect  us  when  you  get  off  the  car  at  the  depot,  for  in- 
stance, against  an  exaction  of  |1  where  the  rate  ought  to  be  50  centos.  - 
Now,  if  this  little  business  in  this  city,  as  between  these  men  who 
stand  around  in  ea^er  competition,  lifting  their  hands  to  you,  saying 
"Here's  a  carriage,"  "Here's  a  carriage,"  bidding  for  your  business. 
if  under  that  competition,  I  repeat,  in  a  little  matter  like  this  there 
is  justification  for  the  arbitrary  fixing  of  a  schedule  of  rates  on  this 
business,  how  infinitely  more  important  it  is  in  respect  to  this 
greater  business  of  the  railroads  of  the  country  that  the  individual, 
the  shipper,  should  be  protected  in  the  rates  he  pays. 

Now,  if  we  take  the  advice  of  those  who  say  that  the  fixing  of 
the  rates  by  review  and  the  correction,  in  promotion  of  justice,  of  a 
rate  which  the  carriers  have  made  is  revolutionary,  confiscatory, 
destructive,  radical,  and  therefore  not  to  be  permitted,  are  we  not 
straining  at  a  gnat  and  swallowing  a  camel  when  we  set  up  this 
regulation  for  the  cabmen  and  street  cars  of  this  town?  You  regu 
late  their  fares.  Is  there  any  possibility  that  you  can  be  so  badly 
hurt  and  oppressed  by  the  rates  of  these  local  carriers  here  where 
they  are  in  competition,  as  the  raan  out  in  the  country,  dependeni 
on  one  road  for  transportation,  is  likely  to  be? 

NO  RECOVERY  POSSIBLE  ON  A  PUBLISHED  TARIFF  RATE, 
HOWEVER  UNREASONABLE  IT  MAY  BE. 

Take  the  man  who  lives  on  one  road  and  has  no  choice  as  be- 
tween roads  in  respect  to  moving  his  crops.  He  may  sue  in  the 
Courts  for  an  excessive  charge,  we  are  told.  Well,  one  Judge — f\ 
Circuit  Court  judge  in  Iowa — ^has  decided  that  the  law  fixes  th'- 
published  tariff  rate  now  under  this  law  as  the  rate  conclusive,  and 
if  you  have  paid  the  published  rate  and  then  complain  that  it  was 
unlawful  and  sue  for  the  excessive  part  of  it  in  a  Court,  that  yon 
can  not  recover  it  because  the  law  has  said  that  the  carrier  shall 
make  the  rate  and  publish  it,  and  when  published  he  shall  collect 
it.    Not  that  he  may  do  it.    It  is  a  crime  for  him  to  remit  it  after  he 


89 

has  published  it.  He  is  guilty  of  payinj?  rebates  if  he  does  so;  he  is 
g:uilty  of  a  criminal  offense  if  he  takes  less  than  his  published  rate. 
He  is  not  only  permitted  to  collect  it,  but  he  is  required  to  collect, 
and  he  is  a  criminal  under  the  law  if  he  does  not  collect  it.  And  yet 
shall  the  law  be  left  in  such  shape  that  a  man  must  go  into  Court 
and  complain  that  he  has  paid  the  rate  which  it  was  a  crime  on  the 
part  of  the  railroad  not  to  collect  after  it  is  published?  According 
to  the  decision  referred  to  there  could  be  no  recovery  in  such  a  case 
if  the  rate  collected  was  the  published  rate,  however  unreasonable. 
But  if  this  decision  be  erroneous  and  the  amount  of  excessive  rates 
collected  be  sufficient  to  justify  suit,  now  who  is  it  that  can  collect 
in  a  case  in  Court? 

FREIGHT  ON  AGRICULTURAL  PRODUCTS  BORNE  BY  THE 
PRODUCER— NOT  BY  THE  SHIPPER. 

Take  the  grain  men  of  the  West  or  the  cotton  men  of  the  Soutii, 
who  grow  the  corn  or  cotton,  as  the  case  may  be.  At  the  end  of  the 
harvest,  or  soon  thereafter,  these  men  sell  their  crop  to  a  local  buyer. 
He  sells  it  to  Mr,  Counselman  or  Mr.  Richardson,  or  some  other 
one.  of  the  great  grain  dealers  in  the  West,  or,  if  cotton,  to  deal- 
ers in  the  South.  And  what  do  the  local  men  pay  for  it?  They  pay 
a  price  which  is  based  upon  what  they  can  obtain  from  the  persons 
with  whom  they  are  dealing.  That  is  fixed  by  the  market  price  of 
the  grain  in  Chicago  or  in  the  markets  of  consumption  farther  be 
jond  in  the  case  of  grain,  and  they  get  that  price  or  thereabouts  less 
the  freight  rate  that  is  necessary  to  take  it  there.  The  grain  man 
sells  at  a  price  which  is  based  on  the  published  rate,  and  suppose 
after  that  a  complaint  is  made  and  upon  investigation  it  is  found  by 
the  Commission  first,  and  then  the  Courts,  that  that  rate  was  un- 
reasonable by  3  or  5  or  2  cents.  The  shipments  have  all  been  made, 
the  crop  has  been  moved,  practically,  and  the  bills  of  lading  have 
been  made  out  in  the  names  of  the  dealers,  not  the  farmer,  the  man 
that  bought  the  grain  shipped  it.  In  the  bill  of  lading  his  name  only 
appears.  He  paid  the  freight.  The  farmer  did  not  pay  it;  the  cot- 
ton man  did  not  pay  it;  each  bore  the  burden  of  it,  however;  but  the 
dealer  paid  the  freight,  having  shipped  the  grain  and  cotton.  Now 
it  is  determined  that  that  rate  M^as  unreasonable  by  two  or  three 
cents,  and  the  Court  sustains  that  finding.  Who  is  it  that  recovers 
back  the  difference,  supposing  anyone  can?  It  is  not  the  farmer, 
who  has  parted  with  his  crop  based  upon  the  higher  rate.  He  has 
no  standing  in  court  or  before  a  commission  or  anywhere  because  he 
bad  no  transaction  with  the  railroads.  He  did  not  ship  anything. 
He  has  no  bill  of  lading,  he  has  no  expense  bill  showing  what  he 
paid,  and  he  has  no  standing  anywhere,  and  yet  he  is  the  loser.  But 
who  can  recover  in  such  a  case?  The  middleman  or  the  dealer  who 
bought  it  and  paid  for  it  at  the  lower  price.  He  has  the  freight 
bill,  the  bills  of  lading,  and  if  anybody  can  recover  he  can.  He  has 
already  had  his  profit  in  the  transaction. 

There  are  illustrations  to  show  that  there  is  no  protection, 
neither  can  there  be  any  protection,  to  those  entitled  to  and  needing 
it  in  these  matters  unless  you  fix  the  reasonable  rate  beforehand, 
so  that  he  need  not  pay  more  than  the  reasonable  rate  nor  sell  his 


90 

products  on  the  false  basis  of  an  unreasonable  rate.  If  he  has  no 
remedy  until  he  has  shipped,  then  he  has  none  at  all,  practically. 
Hence  the  necessity  of  fixing  the  rates  for  the  future. 

EXPERIENCE   IN  TWENTY   STATES  WHERE   REGULATION   OF 
RAILWAY  RATES  WITHIN  THE  STATE  HAS  BEEN 
IN  EFFECT  FOR  YEARS. 

Now.  is  it  so  unreasonable  that  such  a  thing  should  be  done? 
Not  for  a  Commission  to  sit  down  and  write  out  and  promulgate  all 
the  rates  for  all  the  carriers.  That  is  done  in  a  good  many  States, 
as  you  well  know.  There  are  20  States  in  this  Union  now  whose 
Commissions,  or  public  authority  of  some  sort,  fix  rates  for  the  car- 
riers in  respect  to  State  shipments.  Within  all  these  late  years  I 
remember  only  three  or  four  cases  that  have  gone  to  the  Snineme 
Court  (one  w.^s  from  Nebraska,  one  from  Texas,  and  one  probably 
from  South  Dakota),  in  which  the  carriers  have  charged  that  the 
rates  fixed  by  the  State  Commissions  were  unreasonable,  confisca- 
tory, and  unlawful.  With  all  these  19  States — I  included  above 
Virginia,  which  has  just  adopted  a  provision  in  its  new  constitu- 
tion, although  the  constitution  is  not  yet  in  force — there  are  only  a 
few  cases  where  the  railroads  have  had  occasion  to  resort  to  the 
courts  to  stay  the  rate-making  power  of  the  States  on  the  ground 
that  it  was  unreasonably  or  unjustly  exercised. 

Now,  the  record  does  not  show  any  rash  haste  or  disposition  on 
the  part  of  any  public  rate-making  power  to  make  unreasonable  or 
unjust  rates,  where  they  have  the  full  power  to  make  the  rates  out 
and  out.  There  is  no  such  thing  as  that  suggested  in  any  of  these 
bills  or  in  any  reports  or  suggestion  of  the  Commission  at  any  time. 
It  is  not  an  authority  that  anybody  need  covet  for  the  purpose  of 
exercising  it.  It  is  full  of  difticulties.  but  after  a  great  deal  of 
thought  and  experience  about  this  matter,  I  respectfully  submit  that 
it  is  the  only  way  in  which  you  can  protect  the  shipper  or  producer, 
because  to  give  him  a  remedy  of  back  action  to  recover  either  puts 
it  in  the  hands  of  the  middleman  who  has  no  right  to  recover,  for 
he  has  the  only  standing  in  court  and  the  producer  has  none  in  the 
case;  or  else  it  requires  such  a  multitude  of  suits  to  recover  little 
amounts  that  it  is  more  expensive  than  it  is  to  submit  to  the  wrong 
and  bear  the  loss. 

So  you  will  find,  when  you  turn  this  question  over  and  look  at 
it  -from  every  standpoint  as  long  as  you  will,  that  there  is  no  way 
where  carriers  make  unjust  rates  to  protect  the  other  side  except 
to-correct  that  rate  for  the  future,  not  simply  by  condemning  the 
one  that  was  wrong  but  by  substituting  the  one  that  is  right. 

CAN  SHIPPER  BE  LEFT  IN  THE  HANDS  OF  CARRIER  WITH 

SAFETY? 

Now,  where  is  the  hardship  in  this?  The  shipper  is  entitled  to 
a  reasonable  rate.  The  carrier  is  entitled  to  a  reasonable  rate.  Each 
one  is  working  for  his  own  interest,  naturally  and  properly.  The 
carrier  says  that  he  is  capable  of  making  a  rate  that  will  be  just  to 


.01 

his  patrons,  that  he  will  not  oppress  them;  but  can  you  leave  the 
shipper  in  his  hands  with  safety?  Human  experience  says  no.  You 
will  not  permit  the  carrier  to  make  the  rates.  Now,  what  else  does 
the  conscience  and  the  mind  suggest?  Some  natural,  reasonable, 
fair-minded  course  such  as  we  resort  to  in  all  other  matters  of  con- 
troversy? That  is,  to  have  a  court — which  you  can  not  have  in  this 
case,  because  it  has  been  decided  that  this  is  a  legislative  power 
when  it  relates  to  the  future.     That  eliminates  the  courts. 

Mr.  Stewart.  New  Jersey  has  no  public  debt  or  no  State  tax 
whatever.  Her  entire  revenues  are  gathered  from  the  railroads. 
Our  railroad  Commission  fixes  future  rates  does  it  not,  on  the  rail- 
road traffic  in  that  State? 

Mr.  Clements.  That  may  be;  I  am  not  aware  of  a  Commission 
in  that  State. 

Mr.  Stewart.  Has  there  ever  come  a  complaint  to  the  courts 
on  account  of  the  unfairness  of  those  rates? 

Mr.  Clements.    From  New  Jersey? 

Mr.  Stewart.    Yes. 

Mr.  Clements.    None  that  I  have  heard  of  and  call  to  mind. 

Mr.  Stewart.  If  that  is  so  in  New  Jersey  why  could  not  this 
Commission  fix  rates  without  difficulty. 

A  DISINTERESTED  TRIBUNAL  NECESSARY. 

Mr.  Clements.  I  must  confess  that  all  of  these  matters  are  im- 
portant and  that  there  is  more  or  less  difficulty;  but  this  is  done,  and 
I  see  no  other  answer  but  that  it  will  be  more  fairly  done  by  an 
impartial  tribunal,  whether  you  call  it  a  commission  or  a  congres.'?, 
that  has  power  to  do  it,  than  to  let  it  be  fixed  by  either  the  shipper 
or  the  carrier  in  his  own  interest.  Of  course,  it  would  be  wrong  for 
the  shipper  to  make  the  rates,  because  he  is  an  interested  party. 
So,  too,  why  should  the  carrier  make  the  rates?  He  is  an  equally 
interested  party.  Now,  if  the  railway  is  just  like  a  wagon  and  a 
horse,  if  it  is  nobody's  business,  and  every  man  should  make  his 
own  trade  and  do  the  best  he  can,  then  leave  it  where  it  is;  but  if 
there  is  anything  in  the  doctrine  and  declaration  that  the  shipper 
has  certain  rights  on  the  ground  that  this  is  a  public  service,  under 
a  public  franchise,  which  is  put  beyond  controversy  by  the  decisions 
of  the  Supreme  Court,  and  now  admitted  by  all  parties,  then  it  is  a 
different  case,  and  why  should  there  be  any  question  that  there 
should  be  some  power  to  make  an  adequate  and  just  correction  of 
the  rate  made  by  the  carriers  when,  upon  due  inquiry,  it  is  found  to 
be  wrong? 

It  would  be  unreasonable  for  the  shipper  to  dictate  the  rates, 
and  it  is  equally  unfair  for  the  carrier  to  do  so  without  the  power 
of  corrqction  somewhere. 

The  Supreme  Court  has  said  in  one  of  these  cases  that  was  be- 
fore it,  in  which  it  did  not  approve  the  conclusions  of  the  Commis- 
sion in  the  long  and  short  haul  feature,  that  the  carriers  have  the 
right  in  the  first  instance  to  make  their  rates,  not  finally,  but  sub- 
ject to  review  by  the  Commission  and  the  courts.   The  principle  is 


92 

recognized.  The  court  said  in  the  very  case  in  which  it  held  that  the 
law  did  not  authorize  the  fixing  of  a  rate  by  the  Commission  to  take 
the  place  of  the  condemned  rate,  that  Congress  had  the  power  to 
regulate  by  fixing  the  rates  itself,  or  to  delegate  that  authority  to 
the  Commission.  It  having  done  neither,  the  authority  was  not 
found  in  the  act  by  implication. 

CARRIERS   HAVE  AMPLE    PROTECTION    IN    COURTS   AGAINST 

ENFORCEMENT  OF  UNREMUNERATIVE  RATES 

FIXED  BY  THE  COMMISSION. 

Now,  as  I  say,  the  courts  are  open;  carriers  have  the  same  pro- 
tection there  from  an  unreasonable  rate  made  by  the  Commission 
that  everybody  else  has  for  their  various  rights  under  the  law\  The 
question  was  asked  yesterday,  and  probably  on  the  day  before,  in 
respect  to  the  exercise  of  this  authority  in  regard  to  several  rates  or 
several  classes  between  one  State  and  another,  different  States,  and 
if  there  was  not  some  way  in  which  to  limit  the  jurisdiction  of  the 
Commission  in  a  particular  case  to  some  smaller  scope,  some 
smaller  field.  I  appreciate  the  motive  of  that  suggestion  as  having 
in  view  a  possible  compromise  by  which  to  get  something  in  the 
direction  of  what  is  right.  But  I  have  thought  a  good  deal  about  it, 
and  I  see  no  practical  way  in  which  a  limitation  of  that  sort  can  be 
applied  and  make  the  law  efficacious.  For  instance,  the  remedy 
ought  to  be  as  broad  as  the  evil,  and  in  some  cases  the  matter  com- 
plained of  has  been  the  adjustment  of  the  rate  on  all  classes  or  on 
a  large  number  of  them. 

INCREASING  RATES  TWENTY  PER  CENT    BY   RE-CLASSIFICA- 
TION. 

Take,  for  instance,  the  action  of  the  official  classification  com- 
mittee at  the  first  of  the  year  1900.  Alleging  that  the  expenses  of 
operation,  railway  materials,  bridge  materials,  cars,  and  the  things 
that  go  in  to  make  up  ears,  and  labor,  cost  to  the  roads  more  thau 
they  had  previously  cost,  they  said,  ''We  were  justified  in  making 
more  revenue."  It  was  not  a  blind  way  of  going  about  it;  there  was 
no  deceptive  way  of  going  about  it.  What  they  did  was  to  bring 
their  classification  committee  together,  and  that  committee  repre- 
sents all  the  roads  of  the  trunk  lines  from  the  Ohio  River  to  the 
Great  Lakes,  covering  a  number  of  the  most  populous  and  strong 
States  of  the  Union,  in  which  the  classification  applies.  They  came 
together  and  fixed  up  classification  No.  20  to  take  the  place  of  clas- 
sification No.  19,  and  they  increased  the  rates  on  something  like  700 
or  800  articles,  by  taking  them  out  of  the  fifth  class  and  putting 
them  into  the  fourth  class,  out  of  the  second  and  into  the  first,  and 
so  on — that  is,  from  one  class  to  another. 

We  received  several  hundred  complaints  within  a  week  about 
this  one  matter.  The  roads  fixed  upon  these  numerous  and  substan- 
tial increases,  so  far  as  the  public  was  concerned,  without  any 
notice.  I  do  not  mean  to  say  that  some  isolated  shippers  here  and 
there  did  not  know  that  they  were  going  about  it.  but  there  was  no 


93 

official  notice;  there  was  no  notice  to  the  public;  there  was  no  righi 
on  the  part  of  any  shipper  to  be  heard.  I  do  not  say  that  some  ship- 
pers may  not  have  been  permitted  from  time  to  time  to  talk  to 
some  member  or  members  of  the  committee  and  present  their  views, 
but  there  was  no  public  right  for  any  man  to  enter  and  make  sug- 
gestions about  it.  It  was  a  transaction  wholly  within  themselves, 
except  so  far  as  they,  or  any  one  of  them,  permitted  some  shipper  to 
talk  about  it  to  them.  They  made  these  increases,  averaging  about 
31  or  32  per  cent  on  all  of  these  articles  by  this  change  of  classifica- 
tion. Up  to  about  the  1st  of  March  following  the  complaints  had 
been  so  vehement  and  so  numerous  that  they  revised  their  work  and 
so  changed  it  as  to  reduce  the  increase  to  about  20  per  cent  above 
what  the  rates  had  been  before. 

Now,  what  would  vou  do  with  that  kind  of  a  transaction  if  von 
had  limited  jurisdiction?  If  you  were  limited  to  the  consideration 
of  a  complaint  on  a  particular  commodity  between  two  places,  whai: 
would  you  do?  They  substituted  the  higher  classification  for  no  pur- 
pose except  to  raise  the  rates.  We  called  upon  them  on  the  com- 
plaint of  these  hundreds  of  shippers,  the  members  of  the  committee 
were  sworn,  and  they  testified  that  their  reason  was  to  get  more 
revenue,  and  in  doing  it  they  looked  for  the  things  that  would  bear 
the  increase  best.  Do  you  suppose  there  was  no  wrong  in  all  of 
that  to  any  shipper  anywhere?  If  they  are  incapable  of  doing  a 
wrong  thing,  if  in  the  performance  of  their  work  in  their  own  in- 
terest for  gain  they  are  incapable  of  doing  injury  to  the  shipper 
then  we  need  no  law;  but  if  in  all  this  multitude  of  things  they  did 
— upon  which  three  months  later  they  confessed  that  they  had  done 
wrong  so  far  as  to  correct  a  whole  lot  of  it,  do  you  suppose  there 
was  no  imperfection  left  in  it,  no  injustice  left?  If  there  was  there 
ought  to  be  a  remedy  for  it. 

IF  THE  CARRIERS    ARE    INCAPABLE    OF    DOING    WRONG  NO 

REMEDY  IS  NEEDED.     IF  NOT,  THE  REMEDY  MUST  BE 

AS  BROAD  AS  THE  WRONG  DONE. 

If  they  are  incapable  of  doing  wrong,  then  there  is  no  remedy 
needed,  but  assuming  that  there  was  any  injustice  done,  how  can 
you  get  at  it  except  to  apply  a  remedy  which  is  as  broad  as  the  act 
which  they  did?  Now,  what  has  followed?  Under  the  law  as  it  is 
complaints  can  be  made.  These  several  hundred  complaints  I  speak 
of  were  by  telegraph  and  letter.  They  came  all  at  once,  a  flood  of 
protests  against,  it.  We  took  testimony  a  day  or  two  from  the  peo- 
ple who  made  the  complaints  and  the  carriers,  and  sent  it  to  the 
Attorney-General  on  the  request  of  some  of  the  complainants,  who 
insisted  that  the  thing  done  was  a  violation  of  the  Antitrust  Law. 
The  complainants  wanted  to  proceed  against  the  carriers  that  way, 
and  it  was  upon  request  we  sent  it  there.  He  stated  in  a  written 
opinion  that  it  was  not  a  violation  of  the  Antitrust  Law.  So  you 
see  how  they  were  able  to  act  together.  There  were  about  65  roads 
that  were  included  that  used  that  classification.  The  committee 
was  composed  of  fourteen  or  fifteen  members,  and  they  got  together 
and  revised  this  whole  schedule  of  their  rates. 


94 

Mr.  Stewart.  Did  hei  admit  it  was  a  violation  of  the  Inter- 
state  

Mr.  Clbmbxts.  He  did  not  say;  he  said  in  substance  it  was  left 
to  the  Commission  to  do  what  it  could  under  the  interstate  com- 
merce law. 

Mr.  Stewart.     Did  he  discuss  the  Sherman  law? 

Mr.  Clements.  Yes;  but  he  did  not  discuss  it  except  to  say 
that  this  testimony  did  not  show  a  violation  of  the  Sherman  Anti- 
trust Law,  and,  therefore,  these  complaints  were  thrown  back  to 
seek  protection  under  this  law  or  submit.  Several  of  them  filed 
formal  complaints.  Procter  &  Gamble,  of  Cincinnati,  complained 
of  rates  on  soaps.  I  wanted  to  go  into  that  a  little — not  the  merits, 
but  the  nature  of  the  controvesy  merely — to  answer  the  question 
that  was  asked  the  other  day;  but  it  is  12  o'clock  now,  and  you  may 
wish  to  adjourn. 

The  Chairman.  You  can  go  on  now  or  go  on  on  Monday,  just 
as  you  please. 

DISCRIMINATION  OF  OVER  SIXTY  CARRIERS  IN  CLASSIFICA- 
TION OF  SOAP. 

Mr.  Clements.  Very  well.  Procter  &  Gamble  are  soap  manu- 
facturers near  Cincinnati.  Thoy  filed  a  complaint  because  the  soayi 
had  been  changed  from  one  class  to  another,  raising  the  rate.  And 
the  Hay  Association  of  the  country  filed  a  complaint,  which  was  to 
the  same  effect.  Suppose  the  jurisdiction  of  the  Commission  was  so 
limited.  As-,  suggested,  Procter  &  Gamble  had  complained  of  the 
rate  from  their  factory  near  Cincinnati  to  Chicago,  in  order  to  cor- 
rect the  rate  on  soap  to  Chicago,  and  then  they  had  to  file  another 
complaint  on  each  road  leading  to  Cleveland,  and  another  on  each 
road  leading  to  Buffalo,  and  so  on  to  every  part  of  the  country. 
What  the  carriers  did  was  to  raise  the  rate  l)y  raising  the  classifica- 
tion on  soap  on  every  road  using  that  classification,  which  was 
sixty-odd,  not  only  between  Cincinnati  and  Chicago,  but  between 
each  place  and  every  other  place  in  that  territory.  Now,  you  see  nt 
once  that  the  only  possible  way  in  which  you  can  deal  with  the  ques 
tion  to  give  any  relief  in  a  lifetime  is  to  deal  with  it  just  as  broadly 
as  the  carriers  do.  If  complainants  are  entitled  to  any  relief,  tliey 
■are  entitled  to  relief  as  broad  as  the  wrong  done. 

DISCRIMINATION     AGAINST     CHICAGO     AND     CINCINNATI    IN 
RATES  TO   POINTS  IN    THE    SOUTH    ON  MERCHAN- 
DISE AND  MANUFACTURED  ARTICLES. 

Take  another  case  which  was  tried  a  good  many  years  ago.  Ft 
is  the  one  in  which  the  Supreme  Court  decided  that  the  Commission 
had  no  power  to  fix  a  rate.  The  carriers  were  complained  of  by  the 
freight  bureaus  of  Chicago  and  Cincinnati  on  account  of  the  rates 
from  those  two  cities  to  certain  points  in  the  South,  and  it  was 
shown  among  other  things  in  the  investigation  as  follows.  I  rf\ad 
now  from  the  findings  of  fact  by  the  Commission  in  that  case: 

At  the  convention  of  the  Eastern  and  Western  lines  in  ISDN 
it  was  announced  by  Mr.  Peck,  general  manager  of  the  Southern 


95 

Kail  way  and  Steamship  Association,  that  the  Western  lines  ''con- 
cede that  the  transportation  of  manufactured  articles  into  the  ter- 
ritory embraced  by  the  Association  should  be  left  to  the  Eastern 
lines,  and  to  undertake  by  prohibitory  rates  to  prevent  such  articles 
from  Eastern  cities  reaching  Association  points  over  their  lines." 
Accordingly  a  basis  of  rates  was  then  adopted,  by  Avhich  rates  on 
the  Western  lines  for  articles  peculiar  to  the  East  were  to  be  at 
least  10  cents  higher  than  the  rates  on  the  Eastern  lines,  and  rates 
on  Eastern  lines  for  Western  products  were  to  be  at  east  10  cents 
higher  than  the  rates  on  Western  lines. 

CARRIERS  FIXED  A  DIVIDING  LINE  BETWEEN  THE  EAST  AND 

THE  WEST,    DEFINING    TERRITORY    FROM   WHICH 

CERTAIN  TRAFFIC  TO  SOUTHERN  POINTS  IS 

PREVENTED  BY  PROHIBITIVE  RATES. 

Now,  they  fixed  up  a  Avhole  lot  of  agreements  there.     They  de- 
clared openly  then — that  was  before  there  was  any  Antitrust  Law 
— that  their  object  w^as  to  divide  the  traffic  between  the  Eastern 
lines  and  the  Western  lines,  and  there  are  numerous  provisions  iu 
the  agreement  here  shown  to  that  elfect,  declaring,  for  instance  that 
the  lines  leading  through  the  Ohio  River  gateways  shall  exact  full 
locals  and  not  carry  at  other  rates  in  respect  to  any  shipment  that 
would  come  to  them  over  a  line  that  would  not  agree  to  those  rates. 
They  made  a  line  from  Buffalo  down  by  way  of  certain  towns  to 
Pittsburg  and  Huntington,  \\\  Va.,  and  they  said  that  whatever 
originates  east  of  tliat  line  must  go  to  the  South  by  the  Eastern 
roads,  and  not  the  Ohio  River  crossings;  and  whatever  originates 
west  of  that  line  must  reach  its  way  to  the  South  by  the  Ohio  River 
gateways  and  not  by  the  Eastern  lines.     And  they  fixed  penalties, 
and  they  fixed  it  so  it  took  unanimous  consent  to  change  the  ar- 
rangement, and  that  no  rate  should  be  changed  by  the  individual 
roads;  that  each  road  should  collect  full  locals  in  certain  cases;  and 
then   they  fixed  another  line   in  the  South   which    could   not   be 
crossed  by  these  respective  carriers  in  transportation  of  this  great 
traffic,  so  divided.     All  that  is  cited  in  this  case,  and  they  made  it 
apply  to  the  six  broad  classes  of  freight,  general  merchandise,  etc. 
The  declared  object  of  that  was  set  forth  then — because  there  was 
no  law  against  it  then  except  the  common  law — and  they  continued 
that  right  on  down  until  the  decision  was  made  in  the  case  of  the 
Joint    Traffic  Association,  and  the  same    adjustment  continues  to 
this  day,  because  this  decision  of  the  Commission  was  not  put  into 
force  on  account  of  the  fact  that  the  Commission  undertook  to  find 
and  fix  the  reasonable  rate,  and  not  only  found  that  the  rate  the 
carriers  had  made  was  unreasonable,  but  substituted  the  other  rate 
for  it,  and  those  rates  fixed  by  the  carriers  were  made  on  the  basis 
shown  confessedly  10  cents  higher  one  way  than  the  other  way  in 
order  that  the  traffic  might  be  divided  for  the  declared  purpose  of 
allowing  all  of  the  carriers  to  get  the  greatest  revenue  out  of  the 
business  as  a  whole.  ' 

These  rates  were  made  for  tliat  purpose  on  that  basis,  and  it 
was  these  rates  that  were    challenged   by  the  freight    bureaus    of 


96 

Chicago  and  Cincinnati,  and  after  the  question  was  tried  by  the 
Commission  the  Supreme  Court  never  passed  upon  the  question, 
neither  did  the  Circuit  Court  of  Appeals  pass  upon  the  question,  of 
the  reasonableness  of  the  rates  found  and  prescribed  in  the  order 
made,  except  it  was  beyond  the  authority  of  the  Commission  to 
make  it,  because  it  fixed  the  rate  for  the  future. 

THERE   SHOULD    BE   AUTHORITY   TO    DETERMINE   WHAT   IS 

RIGHT  AND  GIVE  IT  EFFECT. 

Now,  Mr.  Chairman,  I  have  not  much  more  to  suggest  about 
this.  I  think  there  ought  to  be  authority  to  review  upon  challenge, 
upon  complaint,  the  rate  that  is  complained  of,  and  that  the  Com- 
mission, or  somebod}',  should  be  authorized — besides  one  of  the 
parties  to  the  controversy — to  determine  not  only  what  is  wrong, 
but  what  is  right,  and  to  give  it  effect;  and  not  simply  condemn 
what  is  wrong  and  leave  the  parties  to  scuffle  it  out,  with  all  the 
delays  incident  thereupon.  If  all  of  a  rate  above  95  cents  up  to  |1 
is  unreasonable,  then  any  part  of  it  is  unreasonable. 

\ 

STATEMENT  OF  MR.  AARON  JONES,  GRAND  MASTER  OF  THE 

NATIONAL  GRANGE,  PATRONS  OF  HUSBANDRY, 

BEFORE  THE  HOUSE  COMMITTEE. 

FREIGHT  RATES  VITALLY  AFFECT  THE  PRODUCING  CLASSES. 

Saturday,  April  12,  1902. 

Mr.  Jones.  Mr.  Chairman,  I  will  not  detain  your  committee 
with  any  extended  remarks  upon  these  questions.  Representing 
the  agricultural  interests  of  the  United  States  as  presented  by  our 
order,  we  are  very  much  concerned  to  have  an  equitable  law  upon 
transportation.  It  is  a  question  that  more  vitally  affects  the 
producing  classes  than  any  other  classes  in  our  country,  as  the 
statistics  show  that  60  per  cent  of  the  freights  carried  upon  our 
vast  railway  systems  are  paid  upon  the  products  of  agriculture. 
Hence,  an  unjust  or  unfair  or  inequitable  freight  rate  is  very  detri- 
mental to  us.  As  has  been  remarked  by  Mr.  Bacon  the  cost  of  the 
freight  is  immaterial  to  the  freighter,  because  he  takes  it  out  in 
the  purchase  of  his  product  and  the  cost  falls  upon  the  farmers. 

I  want  to  say  that  the  farmers  are  not  antagonistic  to  the  rail- 
way interests.  They  do  not  desire  legislation  that  will  cripple  or 
hinder  the  progress  of  the  railroad  development  of  this  country; 
neither  do  they  want  to  prevent  them  from  making  a  reasonable 
and  fair  profit  for  the  money  and  the  energies  engaged  in  transpor- 
tation. But  upon  the  lands  in  which  these  railways  acquire  their 
rights  to  build  their  roads  over  our  property,  where  a  difference 
arises  between  the  owner  of  lands  and  the  company  seeking  a  right 
of  way,  where  those  differences  exist,  all  the  States  have  provided 
that  a  disinterested  tribunal,  not  interested  in  the  lands  or  in  the 
company,  shall  sit  and  determine  what  are  the  damages  to  the  in- 
dividual for  dispossession  of  this  property,  and  that  we  esteem  to 


97 

be  right  and  proper.     It  is  in  the  interest  of  the  progress  of  our 
nation. 

Now,  after  a  railroad  has  acquired  its  right  to  build  its  road, 
if  there  should  any  contention  arise  as  to  the  equity  of  transporta- 
tion of  any  of  the  products  which  grow  upon  this  or  any  other  farm 
in  that  community,  certainly  it  would  be  but  just  and  fair  that 
where  that  contention  arises  some  commission  should  be  able  to 
examine  this  contention  and  determine,  as  in  the  one  case,  also  in 
the  second  case,  what  would  be  right  and  fair,  and  then  we  would 
be  placed  upon  an  equality. 

The  management  of  railroads  has  been  in  the  past,  in  some 
respects,  regardless  of  the  interests  of  the  producer  or  the  interests 
of  the  farmer.  In  the  classification  of  freight  they  have  made  it 
prohibitory  to  market  some  products,  so  that  they  are  absolutely 
worthless,  because  the  producers  are  unable  to  pay  the  freight 
charges  upon  them.  These  charges  are  not  in  proportion  to  the 
cost  of  carriage,  as  we  understand  it.  In  cases  of  that  kind  it 
seems  to  me  that  the  farmers  ought  to  have  a  remedy,  and  that 
remedy  ought  to  be  provided  by  the  National  Congress.  For  many, 
many  years  our  organization,  in  its  subordinate  granges  scattered 
through  41  States  of  this  Union,  have  met  in  our  State  assemblages, 
our  national  assemblages,  and  have  continually  presented  this 
claim  and  pressed  it  upon  Congress  to  give  us  a  remedy. 

We  have  carefully  examined  the  Nelson-Corliss  bill,  and  we 
believe  its  amendments  to  the  original  Interstate-Commerce  Act 
are  just,  fair,  and  equitable,  and  that  they  will  provide  the  remedy 
that  we  have  sought.  That  remedy  is  that  when  the  Commission 
has  examined  a  case  clearly  and  fully,  and  determined  it,  whatever 
their  finding  may  be,  the  railroad  companies  must  obey  that  find- 
ing, and  thereafter  carry  the  product  at  the  rate  of  the  finding  of 
the  Commission  until  it  has  been  reviewed  and  set  aside  by  the 
courts. 

There  is  not  any  other  protection  that  the  farming  interests  of 
this  country  can  secure.  We  are  handicapped.  The  value  of  our 
lands  all  depends  upon  the  management  of  the  railroad  corpora- 
tions. The  rapid  combination  and  consolidation  of  these  roads 
under  a  single  management  makes  it  more  imperative  at  this  time, 
and  more  and  more  forcibly  is  the  necessity  felt  that  we  should 
have  legislation,  such  as  we  ask  now,  than  in  any  other  period  in 
our  country's  history,  because  we  are  absolutely  at  the  mercy  of 
the  transportation  interests  of  the  country. 

This  consolidation  of  transportation  interests  that  is  taking 
place  absolutely  prohibits,  or  absolutely  takes  away,  all  the  possi- 
bilities of  freight  rates  being  regulated  by  competition.  If  com- 
petition is  left  free  to  act  and  money  to  be  invested  in  building 
roads,  and  roads  to  act  independently  of  each  other,  and  competi- 
tion rules  and  regulates  the  prices,  we  have  nothing  to  say.  But 
such  is  not  the  fact.  In  view  of  the  action  of  the  railroad  com- 
panies themselves,  in  placing  under  a  single  management  over  half 


98 

of  the  railroads  of  this  country,  it  seems  to  us  that  we  have  got 
to  look  for  the  remedy  to  Congress. 

Now,  I  want  to  say,  as  a  farmer,  that  grain  growing  has  ceased 
to  be  profitable  from  the  fact  of  the  excessive  freights  that  are 
charged  to  us.  I  operate  something  of  a  farm,  but  I  have  abso- 
lutely quit  growing  grain,  because  I  can  not  afford  to  pay  the 
freights.  And  so  it  is  with  all  the  grain-raising  farmers  of  Indiana. 
We  are  going  out  of  it  as  fast  as  we  can  change  our  methods  of 
farming.  Now,  we  do  not  think  that  it  is  right  that  the  Congress  of 
the  United  States  should  allow  any  class  of  people  to  so  conduct 
their  business  as  to  drive  us  out  of  our  business.  I  believe  to-day 
that  the  American  farmer  feels  the  necessity  of  this  kind  of  legisla- 
tion, and  protection  from  these  abuses,  more  than  he  does  the  nec- 
essity of  any  other  legislation  that  can  possibly  be  passed  by  the 
American  Congress. 

Now,  the  farmers  are  in  danger,  and  I  want,  in  my  position  as 
the  master  of  the  National  Grange,  as  chairman  of  tiie  legislative 
committee  of  the  National  Grange,  having  communication  with  our 
500,000  members  weekly  or  monthly,  as  the  case  may  be,  to  say 
that  I  believe  I  know  the  sentiment  of  the  farmers  upon  this  propo- 
sition, and  it  is  unanimous.  I  care  not  what  political  party  they 
may  affiliate  with,  or  what  party  they  may  sustain,  upon  this  propo- 
sition they  are  united.  They  are  looking  to  you,  and  as  this  pending 
bill  is  now  before  you  for  your  consideration,  I  want  favorable  ac- 
tion on  your  part;  and  an  urgent  and  persistent  effort  to  carry  it 
through  both  Houses  of  Congress  would  to-day  be  hailed  by  the 
farmers  as  the  greatest  act  of  deliverance  that  could  possibly  be 
had  at  your  hands. 

IMPARTIAL  ARBITER  NEEDED, 

As  a  farmer  I  have  a  few  thousand  bushels  now  in  my  granary 
that  I  wish  to  sell.  If  the  matter  was  left  entirely  to  me,  and  I 
should  fix  the  freight  rate  for  the  shipment  of  that  grain,  you  can 
very  well  believe  that  an  Indiana  farmer  w^ould  not  put  that  rate 
too  high;  in  nine  cases  out  of  ten  he  would  put  it  too  low;  because 
of  his  very  selfishness  and  grasping  disposition  to  get  all  that  he 
could  he  would  probably  put  it  too  low.  Now,  it  would  be  unfair 
and  unjust  to  place  the  vast  sums  of  money  invested  in  the  build- 
ing and  management  of  railroads  at  the  dictation  of  myself  as  a 
shipper,  and  to  make  the  railroads  accept  the  rates  that  I'might  see 
proper  to  offer  them.  That  is  unfair,  and  it  would  be  unjust,  and  it 
would  destroy  the  value  of  their  property. 

Turn  the  case  over  and  let  a  railroad  man,  who  has  not  a  dol- 
lar's worth  of  interest  in  my  farm  or  the  farm  of  any  other  man  who 
is  a  shipper— let  him  fix  the  rate.  I  do  not  believe,' although  I  have 
a  high  respect  for  those  men  who  build  and  manage  the  railroads 
and  fix  the  rates,  that  they  are  more  likely  to  fix  a  fair  rate  than  I 
would  be  In  their  place.  They  would  act  and  do  act  just  as  I  would. 
r  believe  that  they  are  as  apt  to  fix  a  little  too  high  a  rate  as  I  would 
be  to  fix  too  low  a  rate.    Therefore  we  would  lock  horns  with  each 


99 

other.  Now,  we  ought  to  have  some  fellow  who  is  not  a  shipper; 
some  good,  broadminded,  honest  man,  with  a  full  knowledge  of  the 
case,  and  with  a  proper  regard  to  the  rights  of  citizenship  in  this 
Republic,  who  ought  to  have  the  case  turned  over  to  him  and  let 
him  hear  the  evidence,  let  him  decide  what  is  right  and  fair  and  just 
between  us. 

I  want  to  say  to  you,  my  friends,  that  the  future  destinies  and 
the  future  prosperity  of  this  country  rest  upon  Congress  seeing  that 
justice  is  done  along  the  line  of  these  rate  questions;  and  this  ques- 
tion underlies  to-day  the  destiny  of  more  of  the  important  industries 
of  the  nation  than  any  other  question  that  has  occupied  the  atten- 
tion of  the  American  Congress  for  this  year  or  any  other  year. 

I  will  say  one  word  more.  For  years  the  National  Grange  has 
petitioned,  has  urged,  and  has  asked  this  legislation.  Last  year  I 
was  here  in  the  interest  of  the  Cullom  bill.  That  bill  was  a  little 
more  drastic  than  this  is,  biit  this  bill  covers  the  same  ground, 
although  not  quite  so  forcibly.  Year  after  year  we  have  been  asking 
this  legislation.  Now  we  insist,  and  we  hope,  and  we  are  confident 
that  you  are  going  to  give  us  this  relief  in  the  present  Congress. 

STATEMENT  OF    MR.  J.  E.  EVANS,    OF    EMPORIA,  KANSAS, 
BEFORE  THE  SENATE  COMMITTEE. 

Feb.  7,  1902. 

Representatives  of  the  Missouri,  Kansas,  and  Oklahoma  Asso- 
ciation of  Lumber  Dealers,  having  been  assured  that  their  views  in 
writing  in  reference  to  the  needed  legislation  in  the  interest  of  in- 
terstate commerce  would  be  considered,  I  beg  leave  to  submit  the 
following: 

With  reference  to  the  expressions  of  Presidents  Cleveland  and 
Roosevelt,  in  their  messages  to  the  Congress,  advocating  legislation 
to  strengthen  the  Interstate  Commerce  law,  the  observation  of  these 
Presidents  covers  a  period  of  five  years.  They  agree  that  an  ade- 
quate interstate  commerce  law  is  a  necessity,  that  it  is  indispen- 
sable to  the  administration  of  justice,  and  that  the  responsibility 
for  the  enactment  of  such  a  law  rests  with  Congress.  For  twenty 
years  and  more  the  general  public  has  demanded  this  law.  In  1887 
the  Commission  was  created,  as  was  then  supposed,  with  power  to 
stop  and  correct  abuses;  in  1897  the  Supreme  Court  held  that  their 
powers  were  purely  advisory.  Since  then  the  Commission  is  prac- 
tically powerless;  it  is,  perhaps,  a  little  better  than  no  Commission, 
but  io  far  as  granting  practical  relief  is  concerned,  the  country 
would  be  just  as  well  off  without  any  Commission.  It  is  contended 
by  representatives  of  the  railways  that  the  granting  of  power  to  the 
Commission  to  substitute  a  just  for  an  unjust  rate,  or  an  equitable 
for  a  discriminative  rate,  is  equivalent  to  depriving  the  roads  from 
the  management  of  their  property  and  investing  the  Commission 
with  power  to  make  rates.  This  was  not  the  intention  of  the  law 
of  1887,  nor  the  practice  of  the  Commission  under  that  law,  neither 
is  it  the  wish  of  the  business  men  of  to-day;  what  we  contend  for  is 
a  law  which  will  give  the  Commission  power  after  a  full,  fair,  and 


100 

impartial  hearing  of  both  parties  in  interest  to  put  into  effect  a 
just  and  equitable  rate,  and  this  rate  to  be  observed  by  the  roads 
in  question  until  the  decision  of  the  Commission  is  reversed  by  the 
Federal  courts. 

Under  the  existing  interstate  commerce  law  the  Commission  is 
povperless.  We  have  employed  the  best  legal  talent  obtainable,  and 
were  advised  by  them  that  the  Commission  can  only  advise  and  in- 
tercede with  the  railroads  to  do  the  right  thing  by  its  patrons,  but 
has  no  power  to  enforce  its  findings.  They  can  not  inaugurate  a 
fair  and  reasonable  rate;  neither  can  we  obtain  redress  in  any  court 
of  the  land,  except  in  so  far  that  we  can  bring  suit  for  recovery  in 
individual  cases  where  the  roads  have  made  excessive  and  unreason- 
able charges;  but  to  prosecute  a  suit  of  this  nature  takes  years  un- 
der our  present  system,  while  in  the  meantime  the  excessive  charges 
are  continued  bj'  the  roads. 

In  conclusion  we  desire  to  state  that  we  come  not  to  ask  a  favor, 
but  simply  justice.  We  do  not  desire  to  arraign  class  against  class. 
We  ask  you  as  our  representatives  and  lawmakers  to  place  upon 
our  statute  book  a  law  which  will  prevent  this.  If  in  your  judg- 
ment the  general  public  is  to  be  left  to  the  mercy  of  conscienceless 
railroad  magnates,  either  repeal  the  interstate  commerce  law  or  let 
it  stand  in  its  present  worthless  form.  Their  practices  of  extortion 
and  discrimination  turn  good  and  able  citizens  into  anarchists. 
"Patriotism  lives  and  grows  on  what  it  feeds  upon."  Create  or  tol- 
erate a  condition  which  deprives  A  of  an  equal  chance  with  B,  which 
will  build  up  one  man  by  pulling  down  another,  or  build  up  one  city, 
community,  or  state  by  tearing  down  another,  and  let  this  condition 
continue  for  years  against  the  protest  of  the  greatest  and  most  re- 
sponsible men  of  the  nation,  including  our  Presidents,  and  you  will 
create  a  condition  of  distrust,  dissatisfaction,  disaster,  and  political 
disaffection. 

All  of  which  is  respectfully  submitted. 

E.  M.  Adams, 
E.  S.  Miner, 

E.   R.  BURKHOLDER, 

Committee. 


10  i 


ADVANCE  IN  FREIGHT  RATES. 


LETTER  FROM  THE  INTERSTATE  COMMERCE  COMMISSION 
TRANSMITTING,  IN  RESPONSE  TO  SENATE  RESOLUTION 
OF  MARCH  II,  1904,  A  REPORT  OF  THE  COMMISSION  RELA- 
TIVE TO  THE  ADVANCE  IN  FREIGHT  RATES  AND  THE 
RESULTING  INCREASE  IN  REVENUE  OF  THE  RAILWAY 
CORPORATIONS  OF  THE  UNITED  STATES  DURING  EACH 
OF  THE  FISCAL  YEARS  ENDING  JUNE  30,  1900,  1901,  1902,  AND 
1903,  AND  ALSO  A  REPORT  SHOWING  THE  CHANGES  IN 
COST  AND  MAINTENANCE  OF  SAID  RAILWAYS  FOR  SAID 
YEARS. 


Interstate  Commerce  Commission, 
Woshinf/ton,  April  7.  1904. 
The    Interstate    Commerce   Commission  herewith  respectfully 
submits  the  followinof  report  in  compliance  with  the  resolution  of 
the  Senate  of   the   United    States,  adopted  March  11,  1904,  which 
reads : 

Resolved,  That  the  Interstate  Commerce  Commission  is  hereby 
directed  to  furnish  the  Senate,  as  speedily  as  may  be  practicable,  a 
report  showing  the  principal  changes  in  railway  tariff  rates,  whether 
resulting  from  the  adoption  of  new  rates  or  the  amendment  of 
freight  classifications,  and  an  estimate  of  the  effect  of  such  changes 
upon  the  gross  and  net  revenues  of  railway  corporations  in  the 
United.  States  during  each  of  the  fiscal  years  ending  June  thirtieth, 
nineteen  hundred,  nineteen  hundred  and  one,  nineteen  hundred  and 
two,  and  nineteen  hundred  and  three,  as  compared  with  the  gross 
and  net  revenue  that  would  have  been  derived  by  them  under  the 
rates  and  freight  classifications  in  force  during  the  fiscal  year  end- 
ing June  thirtieth,  eighteen  hundred  and  ninety-nine;  and  also  re- 
port the  changes  in  cost  of  operation  and  maintenance  of  said  rail- 
ways of  said  years. 

A  statement  prepared  by  the  auditor  of  the  Commission  shows 
the  principal  changes  in  rates  caused  by  changes  in  freight  classifi 
cation  and  the  advances  in  rates  on  a  number  of  specified  commodi 
ties.  Most  of  these  changes  took  place  during  the  year  1900,  but 
some  commodity  rate  changes  occurred  between  that  year  and  the 
end  of  1903.  For  the  reasons  indicated  in  the  statement  no  more 
specific  or  comprehensive  account  of  rate  changes  can  be  given. 

The  resolution  directs  the  Commission  to  furnish  an  estimate 
of  the  effect  of  such  changes  in  rates  upon  the  gross  and  net 
revenues  of  railway  corporations  in  the  United  States  during  each 
of  the  fiscal  years  ending  June  30,  1900,  1901,  1902,  and  1903,  basing 
the  comparisons  upon  the  gross  and  net  revenues  they  would  have 
derived  in  those  years  under  rates  in  force  during  the  fiscal  year 
ending  June  30,  1899.  As  far  as  practicable  the  statement  of  the 
auditor  is  in  conformity  with  such  requirement,  and  following  this 


102 

statement  is  a  table  showing,  for  each  of  the  years  mentioned,  what 
the  gross  revenue  of  the  railways  would  have  been  if  the  average 
rate  per  ton  received  by  all  the  railways  in  the  fiscal  year  1899  haid 
been  applied  to  the  tonnage  carried  over  such  railways  in  the  suc- 
ceeding fiscal  years  to  and  including  1903.  As  to  a  few  staple  com- 
modities the  increase  in  revenue  due  to  advanced  rates  in  effect  dur- 
ing specified  periods  is  estimated  in  the  statement  mentiond  sub- 
stantially in  accordanc  with  the  method  of  calculation  directed  in 
the  resolution. 

No  similar  calculation  can  be  made  respecting  net  revenue  for 
the  reason  that  the  net  revenue  of  a  railway  depends  not  merely 
upon  gross  earnings,  but  also  upon  cost  of  operation,  which  may  be 
varied  by  numerous  conditions,  including  the  density  of  traffic  as 
well  as  the  aggregate  tonnage. 

From  what  has  been  stated  it  must  appear  that  no  accurate  or 
even  approximate  estimate  of  the  actual  effect  of  specific  changes 
in  rates  upon  the  revenues  of  the  carriers  can  be  made.  The  best 
that  can  be  done  is  to  indicate  the  rate  changes,  and  then,  without 
using  them  as  factors,  show  by  yearly  tonnage  and  earnings  and 
the  average  rate  per  ton  for  the  year  1899  results  similar  in  char- 
acter to  those  called  for  by  the  resolution.  This  method  of  com- 
putation is  not  without  value  as  indicating  enormous  additions  in 
recent  years  to  the  cost  of  railway  transportation  to  the  people  of 
the  United  States. 

The  statement  and  table  above  mentioned  constitute  Part  I  of 
the  appendix  hereto. 

The  resolution  also  directs  the  Commission  to  report  the 
changes  in  cost  of  operation  and  maintenance  of  United  States  rail- 
ways for  the  years  therein  mentioned.  Except  for  the  fiscal  year 
ending  June  30,  1903,  this  information  is  contained  in  a  table  pre 
pared  by  the  statistician  of  the  Commission,  which  will  be  found 
herewith  as  Part  II  of  the  appendix.  The  returns  for  the  fiscal 
year  1903  have  not  yet  been  compiled,  and  the  figures  relating  to 
the  cost  of  operation  and  maintenance  for  that  year  must  therefore 
be  omitted  from  this  report. 

All  of  which  is  respectfully  submitted. 

Martin  A.  Knapp,  Chairman. 


APPENDIX. 

Part  I. 

Interstate  Commerce  Commission, 
Office  of  the  Auditor, 

Washington,  March  24,  1904. 

Memorandum. — Senate  resolution,  dated  March  11,  1904,  relative  to 
advance  in  freight  rates  and  the  resulting  increase  in  revenue  of 
the  railway  corporations  of  the  United  States. 

The  freight  traffic  of  the  railways  of  the  United  States  is  car- 
ried under  two  general  classes  of  schedules  known  as  "class  tariffs" 


103 

and  "commodity  tariffs."  The  latter  name  specific  rates  on  cer- 
tain commodities,  such  as  grain,  lumber,  coal,  live  stock,  dressed 
meats,  fertilizers,  etc.  In  the  absence  of  commodity  rates  the  regu- 
lar class  tariffs  apply.  In  these  tariffs  the  rates  are  arranged  in 
classes  and  are  used  in  connection  with  a  freight  classification, 
which  indicates  the  class  to  which  any  given  article  belongs.  Where 
an  article  is  changed  from  one  class  to  another  the  effect  therefore 
is  to  change  the  rate  of  transportation  upon  that  article. 

For  many  years  there  have  been  three  general  freight  classifi- 
cations in  use  throughout  the  United  States,  namely,  the  official 
classification,  which  governs  the  class  rates  generally  in  the  terri- 
tory north  of  the  Ohio  and  Potomac  rivers  and  east  of  the  Missis- 
sippi Kiver  and  Lake  Michigan;  the  Southern  classification, 
which  governs  generally  in  the  territory  south  of  the  Ohio  and 
Potomac  rivers  and  east  of  the  Mississippi  River,  and  the  Western 
classification,  which  governs  generally  in  the  territory  west  of  the 
Mississippi  River  and  also  applies  on  traffic  between  Chicago,  Peoria, 
and  certain  other  points  east  of  the  river  and  points  west  thereof. 

On  January  1,  1900,  official  classification  No.  20  became  effec- 
tive. This  classification  made  many  advances  in  ratings  over  the 
previous  classification  (No.  19),  which  was  in  force  prior  to  the  date 
mentioned.  The  total  number  of  ratings  advanced  was  818,  but 
it  was  found  that  there  were  many  duplications,  the  same  article 
being  classified  more  than  once  in  different  parts  of  the  classifica- 
tion, and  that  such  duplications  amounted  to  about  30  per  cent  of 
the  total  number.  The  actual  number  of  advances  was  572,  as 
follows: 

Advanced — 
Ratings.  From   Class —         To  Class — 

289  4  3 

155  3  2 

71  6  5 

25  2  1 

15  5  4 

8  11* 

5  1  D-1 

2  U  D-1 

1  D-l'  2| 

14  2 


572 


In  the  same  classification  (No.  20)  there  were  six  reductions  in 
rating. 

On  March  10,  1900,  most  of  the  articles  which  had  been  ad- 
vanced on  January  1  from  fourth  to  third  class  were  reduced  to  20 
per  cent  less  than  third  class,  and  most  articles  which  on  same  date 
had  been  advanced  from  third  to  second  class  were  reduced  to  15 
per  cent  less  than  second  class,  and  these  ratings  still  remain  in 

force. 

Prior  to  February  1,  1900,  Southern  classification  No.  25  had 
been  for  some  time  in  force.     There  were  three  issues  of  this  classic 


104 

fication  during  the  year  1900,  namely,  No.  26,  effective  February  1; 
No.  27,  effective  June  1;  and  No.  28,  effective  November  10.  By 
comparing  the  last  with  No.  25  it  was  found  that  G30  changes  were 
made  during  the  year,  of  which  531  were  advances  and  105  reduc- 
tions in  rating. 

Western  classification  No.  30,  which  became  effective  January 
25,  1900,  superseding  No.  29,  which  took  effect  July  1,  1899,  made 
257  changes  in  rating,  of  which  240  were  advances  and  17  were  re- 
ductions. 

These  classification  changes  were  quite  fully  set  forth  in  the 
annual  report  of  the  Commission  for  the  year  1900.  A  number  of 
issues  of  each  of  the  classifications  referred  to  have  been  made  since 
the  year  1900,  but  the  changes  made  in  such  issues  were  compara- 
tively few  and  were  not  of  such  importance  as  to  deserve  special 
notice. 

As  before  indicated,  all  traffic  which  is  carried  at  class  rates 
throughout  the  United  States  is  carried  under  one  or  more  of  the 
three  general  classifications  above  described.  All  of  the  thousands 
of  railroad  points  throughout  the  country  are  therefore  more  or  less 
affected  by  these  classifications  changes,  but  in  order  to  form  an  esti- 
mate which  would  be  of  any  value  as  to  the  amount  of  increase  in 
the  revenues  of  the  railways  as  a  result  of  such  advances  in  classi- 
fication, it  would  be  necessary  to  be  in  possession  of  some  knowl- 
edge, not  only  as  to  the  separate  tonnage  carried  of  each  of  the 
articles  affected,  but  as  to  the  points  between  which  they  were  car- 
ried as  well.  This  information  is  not  available,  and  even  if  it  could 
be  obtained  the  undertaking  would  be  so  enormous  as  to  render  it 
virtually  impracticable. 

The  annual  reports  filed  with  the  Commission  by  the  common 
carriers  under  section  20  of  the  act  to  regulate  commerce  show  the 
total  tonnage  of  all  freight  carried  and  the  total  freight  revenue 
derived  therefrom;  but  with  the  exception  of  a  few  important  com- 
modities, such  as  coal,  ores,  forest  products,  etc.,  the  separate  ton- 
nage of  the  articles  transported  is  not  shown,  and  in  the  cases  of  the 
exceptions  referred  to  the  points  between  which  such  articles  are 
carried  are  not  stated.  The  following  table  shows  the  total  tonnage 
and  freight  revenue  of  all  the  railwavs  in  the  United  States  for  the 
years  ending  June  30,  1899,  1900,  1901,  1902,  and  1903,  with  the  aver- 
age rate  per  ton  for  each  year,  except  that  the  figures  given  for  the 
year  last  named  represent  about  98  per  cent  of  the  total  operated 
mileage: 


Year  ending  June  30- 


1809. 
1900. 
1901. 
1902. 


Total  number 

of  tons 

of  freijrht 

carried. 


9r>9.7fi.'?..=i88 
l,101,fiS0.'2:i«< 
l.0S9.'22().440 
1,200.31 '1.787 
1,221,475,948 


Total  freight 
revenue. 


$91.3.7.S7,15.=i 
1.049. 2P.fi.  32.S 
1,I18,.M.S.0I4 
1.207.22S  S4n 
1,318.320,604 


A  verage 

rate   per 

ton. 


$0.9520 

.9.=>24 

1.0269 

1.0058 

1.0793 


105 

Attached  hereto  is  a  statement'showing  the  actual  tonnaj^e  and 
freight  revenue  for  the  years  named  and  also  what  the  total  freight 
revenue  would  have  been  for  each  of  the  fiscal  years  subsequent  to 
that  ending  June  30,  1899,  at  the  average  rate  per  ton  which  pre- 
vailed that  year,  also  the  increase  in  revenue  for  such  subsequent 
years  resulting  from  the  higher  average  rate  per  ton.  It  is  believed 
that  such  a  statement  gives  a  more  accurate  idea  of  the  increased 
revenue  resulting  from  an  advance  in  freight  rates  and  classifica- 
tions than  can  be  obtained  in  any  other  way.  The  figures  given  in- 
clude the  tonnage  and  also  the  revenue  derived  from  both  class  and 
commodity  rates,  there  being  no  way  of  showing  these  items  sep- 
arately. 

It  should  be  borne  in  mind,  in  connection  with  this  statement, 
that  the  aA'erage  rate  per  ton  and  the  average  rate  per  ton  per  mile, 
being  determined  from  the  tonnage  carried  and  the  revenue  derived 
therefrom,  and  not  from  the  tariffs,  would  vary  somewhat  for  differ- 
ent years  without  any  change  being  made  in  the  tariff  rates,  such 
variation  being  due  to  the  difference  in  the  relative  quantity  of  the 
various  classes  of  freight  carried.  For  instance,  should  there  be  -a 
marked  increase  in  the  percentage  of  tonnage  of  low-grade  freight 
for  any  given  year  over  the  preceding  year,  the  average  rate  per  ton 
and  the  average  rate  per  ton  per  mile  would  show  a  decrease  for 
the  later,  as  compared  with  the  previous  year,  based  on  the  same 
tariff  rates.  It  may  be  said  that  there  is  a  constant  tendency  to- 
ward an  increase  in  the  percentage  of  the  tonnage  of  low-grade 
freight,  so  that  if  there  had  been  no  advances  in  rates  or  classifica- 
tion since  the  year  ending  June  30,  1899,  it  is  safe  to  say  that  the 
average  rate  per  ton  for  each  of  the  subsequent  years  would  have 
been  somewhat  less  than  for  that  year. 

The  increase  in  the  average  rate  per  ton,  for  the  year  ending 
June  30,  1900,  over  the  previous  year  was  quite  small,  being  only 
four  one-hundredths  of  a  cent  per  ton,  and  by  reference  to  the  state- 
ment it  will  be  seen  that  the  increase  in  revenue  for  that  year  over 
the  preceding  year  was  only  $456,730.  For  the  year  ending  June 
30,  1901.  the  increase  in  the  average  rate  per  ton  over  the  year  end- 
ing June  30,  1899,  was  7.49  cents,  the  difference  in  revenue  being 
$81,599,443.  The  average  rate  per  ton  for  the  year  ending  June  30, 
1902,  was  11.0058,  being  5.38  cents  greater  than  the  average  rate  for 
the  first-mentioned  year,  but  a  little  over  2  cents  per  ton  less  than 
for  the  preceding  year.  The  difference  in  revenue  for  this  year  over 
what  would  have  been  produced  by  the  average  rate  of  the  first  year 
in  question  was  164,528.216.  The  falling  off  in  the  average  rate  per 
ton  appears  to  have  been  due  to  a  large  increase  in  low-grade  tou- 
nage  in  1902  over  the  preceding  year.  For  instance,  in  the  items 
of  coal,  coke,  and  ores  plnne.  there  was  nn  ^nrrpnse  in  tonnage  for 
this  year  over  the  preceding  year  of  nearly  30,000,000  tons. 

For  the  year  ending  June  30,  1903,  it  will  be  seen  there  was  a 
large  increase  in  both  tonnage  and  revenue  over  any  of  the  previous 
years  mentioned,  the  increase  in  revenue,  however,  being  relatively 
much  greater  than  the  increase  in  tonnage.  The  average  rate  per 
ton  for  this  year  was  $1.0793,  or  nearly  12f  cents  per  ton  greater 
than  the  average  rate  per  ton  for  the  year  ending  June  30,  1899,  this 


106 

difference  amounting  in  revenue  to  $155,475,502  over  what  it  would 
have  been  at  the  average  rate  of  the  first-mentioned  year. 

In  the  reports  of  the  Commission  on  the  Statistics  of  Railways 
in  the  United  States,  compiled  from  the  annual  reports  of  the  car- 
riers filed  under  section  20  of  the  act  to  regulate  commerce,  the  rail- 
ways of  the  country  are  divided  into  ten  territorial  groups,  the  ton- 
nage, revenue,  etc.,  for  each  group  being  separately  shown.  As 
heretofore  indicated,  the  annual  reports  of  the  carriers  show  the 
tonnage  of  a  few  important  commodities  separately,  and  while  the 
separate  revenue  derived  therefrom  and  the  points  between  which 
the  articles  are  carried  are  not  given,  where  advances  in  rates  have 
been  made  on  any  of  these  commodities  it  is  possible  to  form  an 
estimate  of  the  increase  in  revenue  resulting  from  such  advances 
which  no  doubt,  while  considerably  at  variance  with  the  actual 
figures,  were  they  obtainable,  will  give  a  fair  idea  as  to  the  increase 
in  revenue  resulting  from  an  advance  in  rates  on  such  articles. 

In  the  territory  governed  by  the  official  classification,  heretofore 
described,  both  hay  and  sugar  in  carloads  were  advanced  January  1. 
1900,  from  sixth  to  fifth  class.  Between  New  York  and  Chicago 
this  advance  amounts  to  5  cents  per  100  pounds,  or  |1  per  ton.  Be- 
tween New  York  and  the  territory  lying  between  that  point  and 
Chicago  the  advance  would  be  less,  in  some  cases  as  low  as  40  cents 
per  ton,  while  in  the  territory  west  of  Chicago  and  east  of  the  Mis- 
sissippi River  the  advance  would  be  in  some  instances  as  high  as 
$1.50  per  ton.  An  average  advance  of  80  cents  per  ton  on  these  two 
commodities  in  official  classification  territory,  it  is  believed,  is  a 
fair  estimate. 

The  total  tonnage  of  hay  reported  by  originating  roads  for  the 
years  ending  June  30,  1900,  1901,  and  1902,  was  as  follows: 

Tons. 

1900  4,112,092 

1901 4,080,700 

1902 4,681,509 

The  figures  giving  the  separate  tonnage  of  this  commodity  for 
the  year  ending  June  30,  1903,  are  not  yet  available. 

It  is  calculated  from  the  statistical  reports  of  the  Commission 
that  of  the  total  tonnage  carried  by  the  railroads  of  the  United 
States  about  65  per  cent  is  carried  in  the  territory  governed  by  the 
official  classification.  Taking  the  total  tonnage  of  hay  for  the  last 
year  mentioned  (1902),  namely,  4,081,509  tons,  65  per  cent  thereof 
would  be  3,042,980  tons.  Based  on  an  average  advance  of 
80  cents  per  ton  in  rate,  the  increase  in  revenue  for  that  year  would 
be  12,434,384,  and  from  January  1,  1900,  to  the  present  time,  during 
which  the  advanced  rates  have  been  in  force,  nearly  |10,000,000. 
There  was  no  advance  in  the  classification  of  hay  in  the  southern 
and  western  classifications. 

The  total  tonnage  of  sugar  originating  on  reporting  roads  for 
the  same  years  was  as  follows: 

Tons. 

1900  2,050,558 

1901  2,301,932 

1902 2,254,571 


107 

The  classification  of  sugar,  as  before  stated,  was  advanced  in 
the  oflicial  classification  territory  at  the  same  time  as  hay  (January 
1,  1900),  and  to  the  same  extent,  namely,  from  sixth  to  fifth  class, 
the  increase  between  New  York  and  Chicago  being  5  cents  per  luO 
pounds,  or  |1  per  ton.  Taking  Go  per  cent  as  the  proportion  of  the 
total  tonnage  carried  in  the  official  classification  territory,  we  have 
for  the  year  ending  June  30,  1902,  1,4G5,471  tons.  On  basis  of  an 
average  advance  of  80  cents  per  ton,  the  increase  in  revenue  for 
that  year  would  be  |1 ,172,376,  and  from  January  1,  1900,  to  the 
present  time,  during  which  the  advanced  rates  have  been  in  force, 
something  over  |;4,500,000. 

In  the  western  classification  no  advance  was  made  in  the  classi- 
fication of  sugar,  while  in  the  southern  it  was  advanced  from  sixth 
to  fifth  class.  In  the  latter  territory,  however,  sugar  shipped  from 
the  regular  shipping  points,  such  as  New  Orleans,  La.,  and  Mobile, 
Ala.,  is  almost  invariablv  carried  at  commoditv  rates.  It  does  not 
appear  that  any  general  advance  has  been  made  in  these  rates,  and 
recently  material  reductions  have  been  made. 

On  January  1,  1900,  when  the  carload  rating  of  hay  and  sugar 
was  advanced,  the  carload  rating  on  about  70  other  articles  was  also 
advanced  from  the  sixth  to  the  fifth  class  in  the  official  classifica- 
tion, but  there  is  no  way  of  arriving  at  even  an  estimate  of  the  ton- 
nage of  these  articles,  and  no  estimate  can,  therefore,  be  made  as 
to  the  increased  revenue  resulting  from  the  advance  in  classification 
of  such  articles. 

At  the  beginning  of  the  year  1903  the  rates  on  all  iron  and 
steel  articles  were  advanced  10  per  cent  in  the  territory  governed 
by  the  official  classification.  The  annual  reports  of  the  carriers  do 
not  appear  to  include  all  iron  and  steel  articles  in  the  table  which 
gives  the  separate  tonnage  for  particular  commodities.  According 
to  the  reports  for  the  year  ending  June  30,  1902,  the  total  tonnage 
of  iron  and  steel  articles  originating  on  reporting  roads  was  as  fol- 
lows: 

Tons. 

Iron,  pig  and  bloom   14,714.989 

Iron  and  steel  rails 4,849,255 

Other  castings  and  machinery 9,096,433 

Bar  and  sheet  metal ^ 10,024,712 

Machinery  is  not  included  in  the  list  of  iron  and  steel  articles 
and  does  not  take  the  same  rates.  The  third  item,  as  given  above, 
must  therefore  be  eliminated.  The  total  of  the  other  three  items 
is  30,188,956  tons.  Taking  65  per  cent  of  this  as  the  tonnage  car- 
ried in  official  classification  territory  we  have  19,622,821  tons.  The 
advance  ranged  from  about  one-half  to  1^  cents  per  hundred  pounds. 
The  average  was  probably  about  1  cent  per  hundred  pounds,  or  20 
cents  per  ton.  Assuming  the  tonnage  of  these  articles  for  the  year 
1903  to  be  not  less  than  for  1902,  the  increased  revenue  thereon  for 
that  year,  owing  to  the  advance  in  rates,  would  be  about  ^4.000,000. 

The  total  tonnage  of  bituminous  coal  for  the  year  ending  June 
30,  1902,  was  154,402.501  tons.  There  appear  to  have  been  few  im- 
portant changes  in  the  rates  on  this  commodity  in  southern  and 


108 

western  territory  since  January  1,  1900.  In  the  territory  north  of 
the  Ohio  and  Potomac  rivers  and  east  of  the  Mississippi  River  ad- 
vances were  made  in  the  early  part  of  IDOS  which  probably 
averaged  10  cents  per  ton.  Again,  taking  65  per  cent  of  the  entire 
tonnage  as  the  amount  carried  in  this  territory,  we  have  100,301,025 
tons.  Based  on  the  tonnage  of  this  commodity  for  1902,  the  in- 
crease in  revenue  for  1903,  at  an  average  advance  of  10  cents  per 
ton,  would  be  a  little  over  |10,000,000.  There  appear  to  have  been 
no  material  advances  in  the  rates  on  anthracite  coal  during  the 
period  in  question. 

In  June,  1903,  the  rates  on  lumber  and  other  forest  products 
from  all  lumber-producing  points  in  the  southern  territory  east  of 
the  Mississippi  River  to  Ohio  River  points,  and  points  north  thereof; 
also  from  points  in  Arkansas,  Louisiana,  and  Texas  to  the  same  ter- 
ritory were  advanced  2  cents  per  100  pounds.  For  the  year  ending 
June  30,  1902  (figures  for  1903  not  yet  available),  the  total  tonnage 
of  lumber  and  other  forest  products  was  07,703,050  tons,  of  which 
it  is  estimated  that  about  20,000,000  tons  originated  in  the  terri- 
tory above  described.  Assuming  that  there  has  been  no  falling  off 
in  tonnage,  the  increase  in  revenue  for  the  nine  months  the  advanced 
rates  have  been  in  force,  at  an  advance  of  2  cents  per  100  per 
pounds,  or  40  cents  per  ton,  would  be  about  |0,000,000. 

Grain  and  grain  products  constitute  an  important  part  of  the 
freight  traffic  of  the  country,  the  tonnage  for  the  year  ending  June 
30,  1902,  being  30,813,857  tons.  The  fluctuation  in  the  rates  on  these 
commodities  during  the  last  four  years,  however,  has  been  such  as 
to  render  an  estimate  of  the  effect  of  such  changes  on  raihvay 
revenue  impracticable.  The  rates  on  this  traffic  for  a  large  portion 
of  the  country  are  based  on  the  rates  from  Chicago  to  New  York. 
The  following  table  shows  the  changes  in  the  rates  on  wheat  and 
flour,  carloads,  from  and  to  the  points  named,  since  January  1,  1900, 
to  the  present  time: 

Cents  per  100  pounds. 

Januarv  1,  1900 22 

March  5.  1900   15 

November  1,  1900 I7i 

June  1,  1901   15 

October  21,  1901    17?, 

December  8,  1902    20 

May  11,  1903   18 

December  1,  1903,  to  present  date 20 

As  will  be  seen,  the  rate  in  force  January  1,  1900  (which  be- 
came effective  November  1,  1899),  was  higher  than  at  any  subse- 
quent date,  while  for  a  considerable  portion  of  the  time  the  rates 
on  this  traffic  were  on  basis  of  15  cents  per  100  pounds  Chicago  (o 
New  York. 

Respectfully  submitted, 

J.  M.  Smith,  Auditor. 


109 

Statement  showing  the  total  nnmher  of  tons  of  freight  carried  by  the  railroads  of  the  United 
States  for  the  fUcal  years  ending  June  SO,  1899,  1900.  1901,  190S,  and  190S,  with  the 
total  revenue  accming  therefrom ;  also  the  rf venue  inhirh  would  hare  occrued  <it  (he 
average  rale  of  ^5.2  cents  per  Ion  for  the  years  ending  June  30,  1900,  1901,  1902,  and 
1903,  this  being  the  avi^rage  rate  for  the  year  ending  June  SO,  1899  ;  aud  the  increase  in 
the  revenue  for  the  years  1900,  1901,  1902,  and  1903  resulting  from  the  increase  in  the 
average  rate  per  ton  for  those  years. 


Year    ending    June 
30— 


Number  of 

tons  of 
freiglit  car- 
ried. 


Total  freight 

revenue  as 

charged. 


Amount  of 
freight  revenue 
at  average  rale 
per  ton  of  95.2 
cents,  being  the 
average  rate  for 
the  year  ending 
June  30,  1899. 


Increase. 


1899  . 
1900. 

1901  . 

1902  . 

1903  a 


959, 7^3,583 
l,10l,»i80,238 
1,089,225.440 
1,200,315,787 
1,221,475,948 


1913.737.155 
1,049,-J5t5,323 
1,118,543.014 
1,207,228,845 
1,318,320,()04 


$913,737,155 

1,048,799,587 
1,03«,943,571 
1,142.700,629 
1,162,845,102 


1456,736 

81,599,443 

64,528,216 

155,475,502 


o  The  figures  given  for  the  year  1903  represent  about  98  per  cent  of  the  total  mileage. 


Pakt  II. 


Summary  showing  gross  earnings,  operating  expenses,  ratio  of  operating  expenses  to  earn- 
ings, mileage  operated,  etc.,  of  the  railways  in  the  United  Slates,  for  the  yean  ending 
June  SO,  1899,  1900,  1901,  and  1902. 


1899. 

1900. 

Increase,  1900 
over  1899. 

Item. 

Amount. 

—  J.' 

Hi 

o  Q- 
5  sc 

o  ~ 
O.C 
O  0) 

0.  O 

O 
O 

£ 

a 

a- 

Amount. 

—  oi 

K    (1, 

o  i 

""  Z 
o  a. 

c  "> 
0  O 

0-  o 

o 
® 

c 

—  ■6 

0,2 
nr  a 

a 

Amount. 

Per 
cent. 

Gross  earnings  fromoperation. 

SI,:n3,filo.ns 

Perct. 

$7,005 

8 1,487,044.81-1 

Perct. 

?7.722 

$173,4.34,696 

13.20 

Operating  exppn.«es  : 

Mnintf  nance  of  way  and 
strneliires 

Maintenance    of    equip- 
ment   

180,410,806 

150,919,249 

486,1.59,607 

38,67G,XK;{ 

802,454 

21.05 

17.62 

56.7:i 
4..S1 

.09 

962 
805 

2,bm 

2i.t\ 
4 

211,220,521 

181,173,880 

529,116,326 

39.328.7li5 

589.019 

21.97 

18.84 

55.04 

4.09 

.06 

1,097 

941 

2,748 

204 

3 

30,8(19,715 

30,254,631 

42,956,719 

651,882 

a213,4:f5 

17.08 
20.05 

CoiKiiii-ting     tran.-poria- 
tion 

8.84 

1.69 

a26.60 

Total    operating    ex- 
penses   

856,968,999 

lOO.OC 

4,571 

961,428,511 

100.011 

4,99:i 

104,459,512 

12,19 

Percentage  of  operating  ex- 

65.24 
187,534.68 

64.65 
192,556.03 

Mileajje      operated      (single 
track) miles... 

a  Decrease. 


110 

Summary  showing  gross  earnings,  operating  expenses,  etc. — Continued. 


Item. 


Gross  earnings  from  operation 

Operating  expenses : 

JIainteiiHnce  ol  way  and  structures 

Maintenaiii-e  of  equipment 

Coiidu'-timr  transportation 

Genf  ral  expenses 

Unclassified 

Total  operating  expenses 

Percentage  of  operating  expenses  to  earnings 

Mileage  operated  (single  track) miles 


1901. 


Amount. 


$1,.588,.=.26,037 


231,050,602 

19O,J99,nfi0 

56n,26."i,789 

42,066,553 

1,2118.766 


1,0311,397,270 


64.86 
195,561.92 


—  X 

=  IS 

"  z 

c  a 

-  Oi 


Peret. 


22.42 

1846 

54.87 

4.13 

.12 


100.00 


a, 
o 


*8,123 


1.182 

973 

2,890 

218 

6 


5,269 


Increase,  1901 
over  1900. 


-Amount. 


?101,4R1,22.S 


19,836.081 
9,125,680 

36,140,463 

3,237,788 

619,747 


68,968,759 


Per 

cent. 


6.82 


9.39 
5  04 
0.83 
8.23 
105.22 


7.17 


1902. 

Increase,  19o2 
over  1901. 

Item. 

Amount. 

—    X 

■^  X 

~  5 
0  c 

■"   X 

r-    ^ 

.1  5f 

C   1. 

a 

0 
s> 

—  -a 
-_  li 
0  -^ 
a  -z 

S 

s 

.Amount. 

Per 
cent. 

Gross  earnings  from  operation 

51.726,380,267 

Perct 

$8,625 

$1.37,8.54,230 

8.68 

Operating  expenses : 

l^laintenance  of  wav  and  structures 

248,381,594 

213,380,644 

609,961,095 

44,197,880 

326,9:54 

22.25 

19.12 

54.64 

3.'-6 

.113 

1,241 

l,06li 

3,047 

221 

2 

17,324,992 

23,081,0X4 

44,695,906 

1,631,:  27 

a»81,s32 

7  50 

Maintenance  of  equipment 

12  13 

Conducting  transportation 

7.91 

General  expenses 

H  S3 

Unclassified 

a  72  95 

Total  operating  expenses ...  . 

1.1I6.24S.-47 

I'KI.CO 

5,577 

8.5,851,477 

8  33 

Percentaee  of  operating  expenses  to  earnings 

Ii4.lj0 
200,154.56 

Mileage  operated  (single  track) miles... 

a  Decrease. 


Interstate  Commerce  Law  Convention 


HELD     AT 


St.  Louis,  Mo.,  October  28-29,  1904 


REPRESENTING 

FOUR  HUNDRED  AND  FORTY 

COMMERCIAIv    AND    INDUSTRIAL 

ORGANIZATIONS, 

NATIONAL,  STATE,  AND  LOCAL, 

IN  FORTY-FOUR 

STATES  AND  TERRITORIES, 

HAVING  MORE  THAN  A  MILLION  CONSTITUENT  MEMBERS 


EXECUTIVE  committee 

E.  P-  Bacon,  Milwaukee,  Wis.,  Chairman 

C.  H.  SeybT,  St.  Louis,  Mo.,  Vice-Chairman 

R.  S.  Lyon,  Chicago,  111.,  Treasurer 

S.  H.  Cowan,  Fort  Worth,  Texas 

J.   E.  Howard,  Wichita,  Kansas 

Wm.  Larrabee,  Clermont,  Iowa 

R.  W.   HiGBlE,   New  York  City 

H.  D.  LOVELAND,  San  Francisco,  Cal. 

MURDO  Mackenzie,  Trinidad,  Colo. 

Geo.  S.  Gardiner,  Laurel,  Miss. 


FRANK  BARRY,  5^fr^/«r)/,  •• 

P.  O.  Box  290,  Washington,  D.  C. 

Office,  Riggs  House. 


INDEX. 


Page 

Advance  in  Freight  Rates 101 

Appeals  to  Congress  for  Legislation 12 

Baoon,   E.   P.,  of  Milwaulcee,   Wis.,  Chairman  Interstate  Commerce  Law 

Convention 1-8 

statement  regarding  Interstate  Commerce  Law  Convention J 

Cliaracter  of  Legislation  Keeded 1,2 

Scope  and  Effect  of  the  El  kins  Act 2 

Provisions  of  Present  Bill 2,  3 

Weakness  of  the  Present  Law 4 

Amendment  Recommended  by  Interstate  Commerce  Commission.    ...  4 

Continuous  Effort  to  Secure  Legislation 5 

Necessity  of  Proposed  Amendment 5 

Experience  of  Twenty  States,  having  Regulation 7 

Petition  for  Action  by  Congress 8 

Clements,  Hon.  Judson  C,  Interstate  Commerce  Commissioner 79-96 

The  Necessity  for  Regulation  of  Railway  Rates  Became  Imperative  as 

Strife  between  Communities  for  Business  Developed   81 

Interstate  Commerce  Act  passed  in  1887  was  Tentative  and  Experi- 
mental, and  no  Amendment  made  since  1889 81 

Railroad  Charges  aggregate  Three  Times  as  nuich  as  the  Government 

Customs  Duties  and  1  nternal  Revenue  combined 82 

Remedies  through  the  Courts  Theoretical,  but  Impracticable 82 

Fifteen  Years'  Experience  has  shown  that  Interstate  Commerce  Act  is 

Defective 83 

Investigation  of  Some  Value 83 

The  Rate  the  Vital  Matter 84 

A  Railway  Solicitor's  Appeal  to  the  Commission  to  Fix  the  Rate  to  be 

charge<i  if  tiie  Rate  complained  of  is  Found  Unreasonable 84 

A  Reasonable  Rate  for  the  Future  of  More  Importance  to  the  Shipper 

than  any  Recovery  on  Previous  Shipment 86 

Regulation  of  Rates  No  Hardship  to  the  Carrier,  and  a  Necessity  of 

Social  Economics.    ... 86 

The  Elements  that  enter  into  the  Determination  of  Rates 87 

An  Illustration  Close  at  Hand 88 

No  Recovery  Possible  on  a  Published  TariflF  Rate,  However  Unreason- 
able it  may  be ...  88 

Freight  on  Agricultural  Products  borne  by  the  Producer — not  by  the 

Shipper 89 

Experience  in  Twenty  States  where  Regulation  of  Railway  Rates  within 

the  state  has  been  in  effect  for  Years 90 

Can  Shipper  be  Left  in  the  Hands  of  Carrier  with  Safety? 90 

A  Disinterested  Tribunal  Necessary 91 

Carriers  have  Ample  Protection  in  Courts  against  Enforcement  of  Un- 

remunerative  Rates  fixed  by  the  Commission 92 

Increasing  Hates  Twenty  Per  Cent  by  Reclassification 92 

If  the  Carriers  are  Incapable  of  Doing  Wrong  No  Remedy  is  Needed; 

If  Not,  the  Remedy  must  be  as  Broad  as  the  Wrong  done. .    93 

Discrimination  of  over  Sixty  Carriers  in  Classification  of  Soap 94 

Discrimination  against  Chicago  and  Cincinnati  in   Rates  to  Points  in 

the  South  on  Merchandise  and  Manufactured  Articles 94 

Carriers  Fixed  a  Dividing  Line  between  the  East  and  the  West,  Defin- 
ing Territory  from  which  certain  Traffic  to  Southern  Points  is  Pre- 
vented by  Prohibitive  Rates .••••.•  ^^ 

There  should  be  Authority  to  Determine  what  is  Right  and  give  it 

Effect  '. 96 

Committees  of  House  and  Senate 9 

(113) 


J14 

Page 
Constitutional  and  Legal  Authoiity  of  Conu;ress  to  Regulate  Interstate  Coni-> 

nierce 20 

Cooper-Quarles  Bill,  Synopsis  3 

Text 9 

CuUoin  Bill 1 

Elkins  Bill 1-2 

Evans,  J.  E. ,  of  Emporia,  Kansas 99 

Fifer,  Hon.  Jos.  W.,  Interstate  Commerce  Commissioner 75-79 

Shall  there  be  any  Control  over  Rates  and  Where  Shall  It  be  Lodged?.  76 

Imputation  that  Requires  no  Answer 76 

Average  Time  Consumed  in  Securing  Final  Decision,  Four  Years 77 

Congress  Must  Provide  Means  of  Speedy  Hearing 77 

Remedies  througli  the  Courts  are  Impracticable  and  Inadequate.    ...  77 

The  Public  Must  Suffer  for  Years  Pending  Final  Decision  of  the  Courts.  78 

Congress  Has  Power  to  provide  a  Speedy  Remedy 78 

Discrimination  between  Carload  and  Less  Than  Carload  Rates 78 

The  Dispatch  of  Proceedings 79 

Freight  Rates  Advanced 101 

House  Committee  Having  Bill  in  Hand 9 

Industrial  Commission's  Recommendation 14,  15 

Interstate  Commerce  Commission 4,  36,  68,  75,  79,  101 

Interstate  Commerce  Law  Convention 1 

Petition  to  Congress 17 

Jones,  Aaron,  Grand  Master  National  Grange,  Patrons  of  Husbandry   96-99 

Freight  Rates  Vitally  Affect  the  Producing  Classes 96 

Impartial  Arbiter  Needed   " 98 

Kernan,  Hon.  J.  D.,  of  New  Yorii,  Author  of  Original  Interstate  Commerce 

Act 23-35 

The  Vastly  Changed  Situation 24 

Common  Law  Remedies  through  the  Courts  Inadequate 24 

Power  of  Commission  to  Fix  Rates  Remedially  not  Questioned  for  ten 

Years ." 24 

Congress  Can  Delegate  the  Power 25 

Competition  is  Superseded  by  Combination 27 

Power  Exercised  by  Commission  to  Fix  Rates  Accepted  by  Railroads 

until  Denied  by  Supreme  Court 28 

The  Aim  not  High  or  Low  Rates,  but  Relatively  Just 28 

Original  Intention  of  Act  to  Confer  Power  to  Correct  Rates     29 

Delay  under  Present  Law  Renders  it  Futile 30 

How  Injustice  Might  Result 31 

Staying  the  Order  of  the  Commission  Results  in  Continuance  of  an  Unjust 

Rate  in  Most  Cases 31 

Perfect  the  Interstate  Commerce  Law 33 

Need  of  Legislation  to  Increase  Efficiency  of  Commission  and  Hasten 

Remedy , 33 

Owing  to  Delays  in  Federal  Courts,  Decisions  are  Practically  Useless.. .  34 
Legal  and  Constitutional  Authority  of  Congress  to  Regulate  Interstate  Com- 
merce           20 

Missouri,  Kansas  &  Oklahoma  Association  of  Lumber  Dealers   99 

Knapp,  Hon.  Martin  A.,  Chairman  of  the  Interstate  Commerce  Commission.  36-68 

The  Present  Law  Defective  and  Unworkable 36 

Carriers  will  Continue  to  Exercise  the  Initiative  in  Rate  Making 36 

Commission  Desires  such  Amendments  as  will  Effect  the  Results  obvi- 
ously Intended  by  Framers  of  the  Act 37 

What  Method  shall  be  provided  to  Correct  a  Rate  found  to  be  Excessive 

or  Discriminative  between  Communities  or  Commodities? 38 

Competition  between  Markets  a  Partial  Corrective 38 

Will  Congress  Provide  any  Way  by  Which  Injustice  in  Railway  Rates 

can  be  Corrected  ? 39 

The  Proposed  Bill  would  put  the  Law  just  Where  Everybod)'  Supposed  It 

Was  when  Passed 39 

Course  of  Procedure  before  the  Commission 42 

The  Commission  an  Administrative  Bodv 43 


115 

Page 
The  Coimiiission  can  make  only  such  an  Order  as  is  Justified  hy  the 

Facts  Proven  upon  Investigation  of  Formal  Complaint 44 

The  Crucial  Question— Shall  tlie  Commission  have  Authority  to  correct 

a  Rate  found  to  be  Wrong 44 

Scope  of  an  Investigation  and  Determination 45 

Long  and  Short  Haul  Provision  Divested  of  all  Vitality  by  Interpreta- 
tion of  Supreme  Court 47 

Mileage  Cost  of  moving  Traffic  Diminishes  as  the  Distance  carried  In- 
creases     • .  •  49 

Rates  as  High  Today  as  Fifteen  Years  Ago 49 

J^ower  Rates  on  Export  Traffic  than  on  Domestic 50 

The  Extent  of  the  Present  Authority  of  the  Commission 50 

What  Order  shall  the  Commission  be  Empowered  to  Make? 51 

The  Course  Pursued  by  the  Railroads  since  the  Supreme  Court  Decision.  51 
The  Railroads  have  Ignored  the  Order  of  the  Commission  to  Cease  and 

Desist  from  charging  a  Rate  found  to  be  unjust 52 

The  Commission  Cannot  Enforce  the  Order  it  makes 53 

JSuits  to  Enforce  Orders  of  the  Commission  through  the  Courts  have  been 

Pending  over  Five  Years 54 

Orders  of  no  Effect  until  Enforced  by  Court  of  Last  Resort 55 

Final  Enforcement  of  Order  by  Court  of  Last  Resort  affords  no  Adequate 

Remady 56 

Supreme  Court  has  no  Power  to  Fix  a  Rate  for  the  Future.    .  .    56 

Not  Advocating  Extreme  or  Radical  Measures 57 

Power  to  Kix  a  Rate  for  the  Future  resides  in  Congress  and  can  be  Dele- 
gated only  to  a  Commission — Not  to  a  Court 58 

The  very  limited  Authority  of  the  Commission  and  its  Ineffectiveness.  58 
Determination  of  Rate  for  Future  Application  cannot  be  made  a  Judicial 

Question 59 

Comprehensiveness  of  Order  of  the  Commission  under  proposed  Amend- 
ment   _•  •  • "^O 

Order  of  Commission  must  be  Restricted  to  the  Facts  proven  in  the  In- 
vestigation  61 

The  Many  and  Diverse  Elements  of  Cost  to  be  Considered .  (i2 

Jurisdiction  of  Commission  Not  to  be  Enlarged  by  any  pending  Bill.  . .  63 
Shall  the  Determination  of  What  Railroads  shall  Charge  the  Public  re- 
main wholly  in  Their  Own  Hands? 64 

Would  some  Intermediate  Method  be  Ineffective ? 65 

No  Foundation  for  the  Charge  that  the  Commission  lias  Failed  to  Per- 
form Its  Duties  under  the  Present  Law. 65 

Order  of  the  Commission  is  of  No  Binding  Force  and  Not  Obligatory 
until  Writ  Enjoining  Obedience  is  issued  by  the  Court  upon  Petition 

of  the  Commission.. 65 

Procedure  should  be  Reversed,  and  the  Order  of  the  Commission  be 

Obligatory  until  set  aside  by  the  Court  upon  Petition  of  the  Carrier..  66 

The  Cliange  Proposed  Not  a  Radical  One 66 

How  the  Carrier  will  get  "  Its  Day  in  Court '' ■        67 

The  Penalties  would  Accumulate 67 

Question  of  the  Right  of  Congress  to  Delegate  Rate-making  Power  to 

the  Commission  settled 68 

National  Association  of  Manufacturers 19 

National  Grange,  Patrons  of  Husbanday 16 

National  Live  Stock  Association 18 

Nelson-Corliss  Bill. . .    1.2 

Power  of  Commission  to  Correct  Rates 24,  25,  28,  29,  35,  39,  50,  53,  55,  58 

Power  of  Congress  over  Interstate  Commerce 20,  68,  68,  78 

President's  Messages 12,  13 

Prouty,  Hon.  Charles  A.,  Interstate  Commerce  Commissioner  68-74 

Is  the  Commission  Incompetent  or  is  the  Law  at  Fault?   68 

Discrimination  in  Published  Rates,  and  the  Evil  of  too  High  a  Rate. . .  69 

Present  Railroad  Control 69 

Freight  Rates  Touch  Everything 71 

The  Cost  of  Moving  Freight  Decreasing  and  the  Traffic  Increasing 71 

The  Situation  Calls  for  Relief • 72 


116 

Page 

An  Illustrative  Case^Complaint  of  Rates  on  Ha^' 73 

An  Effective  Supervisor}'  Control  over  Hates  the  Onlj'  Means  of  Relief.  73 

A  Reasonable  Compensation  must  be  Afforded  to  the  Carrier 74 

Complaints  b}'  the  Hundred 74 

Qnarles  Bill.     See  Conper-Quarles  Bill. 

Senate  Committee  Havinsi  Bill  in  Hand ...  9 

State  Legislatures'  Appeals 16 

Statement  Kelating  to  Pending  Measure. .     1,  12 

State  Railroad  Commissioners'  Appeals 16 

Synopsis  of  Cooper-Quarles  Bill 3 

Testimony  of  Record 23 


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